IQ Option offers different assets for trading, including Forex, stocks, ETFs, commodities and crypto via CFDs, as well as binary and digital options. In this article, we will review the main information about trading binary options on IQ Option: key features, traderoom set-up and possible strategies. Whether you’re thinking about trading binary options as a career or just looking for a side hustle to increase your capital, these tips will likely come in very useful.
What is Binary Options Trading?
Basically, binary options trading involves making predictions on whether the price of a chosen asset is going to go up or down after a certain period of time. There are two potential outcomes: if you chose the right direction of the price change, you make a profit. Conversely, if your prediction was incorrect, you lose the initial investment.
Key Features of Binary Options Trading
- Expiration time: This is the period between buying the option contract to the time it finally closes. The period can vary from one minute to a month. Most traders usually opt for short term options that last from 60 seconds to 30 minutes.
- Payout offer: A payout offer is a return, usually in percentage, that the broker offers to traders. In the example below, the offer is 83% for a successful trade. The maximum potential loss is limited to the amount invested in the option, which can be as little as $1. As a trader, you will know these percentages before placing your bid.
For example, a trader thinks that the price of the EUR/USD binary option will go up soon. He places a “Higher” trade with $100. The payout offer for this trade is 83% at the moment. When the contract closes, and the price goes up, a trader will get back the $100 and make a profit of 83% of the initial investment. This amounts to $83 of profit for this trade. In case the prediction was not correct, and the price went down after expiration time, a trader will lose the $100 they invested in this trade.
Here is an example of a binary options trade set-up on IQ Option. To open a binary options deal, a trader can follow these simple steps.
- Choose the amount the would like to invest in a deal and indicate it in the ‘Amount’ section on the right-hand side of the screen.
- Enter the expiration time below the amount.
- Pick the direction of the price change: Higher or Lower.
- You’re done! Now all that’s left is to wait for the result of the trade. In the meantime, you may open more deals without waiting for the first one to close.
Binary Options Trading Strategies
There are different strategies you can apply when trading binary options on IQ Option. The choice might depend on your goals and personal preferences. For instance, day traders often prefer quick strategies ideal for short-term trading, such as scalping. Those looking for more long-term strategies that don’t require spending a lot of time in the traderoom tracking price charts may opt for swing trading. Have a look at this material to evaluate your current conditions and decide on a suitable trading approach: How to Choose a Strategy?
Binary options traders can also apply technical and fundamental analysis tools to get valuable insights into market conditions and price changes.
The Bottom Line
As with any kind of investment, there are risks and rewards, so it helps to understand binary options before making your moves. When starting out, you can use demo accounts to practice, understand your trading market, use analysis tools to make decisions, and keep track of your trades. If you decide on trading binary options as a career, you’ll need more in-depth knowledge and advanced strategies, which you can also find on this blog. However, this guide is enough to get started — so use it to your advantage!
