There is a large amount of different Forex and Binary options trading strategies and trying to decide on which one to use can be overwhelming. Still, sticking to a certain trading approach and mastering it is quite important for beginners. In this article we will be looking at 3 most popular trading strategies that are commonly used by traders on IQ Option. Choose the strategy that suits you best!
The principle of this strategy is very simple. Traders wait for the asset to demonstrate rapid movement and then open the deal. The move can be in either direction, as you can open both long and short positions. So what it basically means is that traders open a Buy deal when the asset is starting to rise up or open a Sell deal when the price is starting to go down.
A momentum trader would open a “Buy” deal when the asset shows signs of rising and close it as soon as it looks like the asset price will reverse and go down. The same approach is practiced with “Sell” deals: a trader would open the deal when the asset price starts going down and would close the deal once the price reverses.
There are many factors that can cause a price to rapidly increase or decrease and a trader can use their knowledge of the market and technical indicators in order to trace assets that are gaining momentum.
The technical indicators that could be used with this strategy are Momentum indicators like MACD, Stochastic Oscillator, RSI – indicators that show the strength of the trend. Traders may also combine momentum indicators with trend indicators for more accurate signals.
Traders that choose the scalping strategy embrace small gains, and they may be right as small wins add up to larger profits. Consequently, the length of the deals is also quite short. Depending on the market and the trader’s approach, a deal can last from several seconds or minutes to several hours. Scalpers may quickly close deals in order to move on to the next one and acquire profits from a sequence of small trades.
Since this strategy is all about making short-term deals, the convenient chart types to use may be bars and candles. This allows the use of candles and bars of short intervals (one-minute, five-minute ones and so on). For short-term trading such indicators as Moving Averages, RSI, Parabolic SAR and Stochastic Oscillator may be used.
Scalpers may close deals with only several cents of profits, as they believe that even small profits accumulate into a bigger result. Scalping may be a good strategy for traders who like short-term trading, however, it is important to note that such an approach may increase the risks. A scalper has to be disciplined and organized and sticking to a trading plan might be a good idea.
The market is generally affected by the events that happen in the world. Important news affects certain assets or the market as a whole. Good news generally causes the assets to grow in price, bad news causes the assets to diminish. However, it is not always this straightforward. When news trading, it is necessary to study the market and predict how certain news might affect it before it actually happens. A news trader needs to always be alert, pay attention to the assets they are focused on and be ready to react.
For example, the recent news events regarding coronavirus and the whole situation caused a sharp decrease in stocks, many industries like tourism and airlines were affected. Making estimations regarding news events is the key to successful news trading.
Of course, there is no one universal strategy for everybody. Every strategy has its advantages and disadvantages: you may spend time practicing and experimenting, learning about your own preferences and your individual trading style. See if you can master one or all three of these strategies and take your trading to a new level!