Investors have free access to a large number of different technical analysis tools and resources. You can even use these directly through the trading platform. You can easily see the moving trends of trading, and through the technical analysis panel it is almost effortless to make investment decisions based on completed analysis. You do not need any previous expertise to do this.
There is an almost endless quantity of free educational materials for you to use, such as free webinars, ebooks, instructional videos and tutorials. With the help of these extensive materials, you can easily develop your skills and become a much better investor. Below are three examples of tutorial videos that are available for investors.
Trading Strategies for IQ Option Broker
Before we get to the actual strategies, you need to understand the system that they work with.
These are bars in charts depicting the price movements of an asset. They represent the opening and closing of a price range. If the price moves up it will be represented by a green candle. If the price moves down, it will be represented by a red candle.
These are lines in the chart which represent price movements and show the corridor within which the price range of the asset is likely to fluctuate. The support lines on the lower side of the chart represent the level from which prices tend to bounce upwards. The resistance level refers to the trend line at the upper side of the chart and it represents the level from which prices tend to bounce downwards. The area between the two trend lines is the trending corridor.
Candlesticks, trend lines and the trending corridor are some of the most popular and effective tools in binary options signal generation.
The Main Strategies
The Rebound Line Strategy
The aim of this strategy is to catch the movement of an asset at the very moment when the price cannot break through the support of the resistance levels. In this strategy, when the price reaches the resistance level and the candle closes before this level, the possibility of a rebound is greater than the possibility of a growth. Here, you are better off buying a “put” option. With the same strategy, if the price reaches the support line and the candle closes just above this level, you are better buying a “call” option. This strategy is relevant whether the trend is neutral, upward or downward.
The Three Black Crows Strategy
This strategy defines the downward reversal on the uptrend. Look out for an uptrend with several ascending candles in a row. Wait for the reversal of three descending candles in a row. Closing at the third candle is a signal of an uptrend turning into a downtrend. At the same time, when there are three descending candles in a row, and the price closes at the end of the third, this will be a signal of a downtrend turning to an uptrend. These signals are what you will use to make your trades.
Piercing Line Candlestick Pattern
Here you study the candlesticks carefully and look out for a trend in the price movements. What you will be on the lookout for is the precise moment where you will notice a reversal of a downtrend. Find two candles on the chart one of which closes the price in the middle of the previous one. Wait for the second ascending candle. When a third ascending candle appears it will be a signal of a trend reversal. This will happen both ways. Look out for another set of two candles and see if one closes in the middle of the one before it. You will look at the second candle while waiting for the third descending candle. This will be the signal of another trend reversal this time on the opposite side of the chart. You can then execute the trade in line with the signal and you can expect a winning conclusion.
The Rainbow Strategy
This strategy is a little more technical than the strategies above. Here, three exponential averages with different periods are used simultaneously. On the chart, you will mark the first line with a period of 6 in blue. The second line with a period of 14 will be marked in yellow while the third line with a period of 26 will be marked with red.
For strong signals of an imminent drop in an asset’s price, the following points with the moving average will be noted.
- The blue line will be at the top
- The yellow line will be in the middle
- The red line will be at the bottom
The intersection of the blue line with the yellow line will be the signal to enter the market and buy a “put” option.
For strong signals of an imminent rise in an asset’s price, the following points will be noted.
- The red line will be at the top
- The yellow line will be in the middle
- The blue line will be at the bottom.
The intersection of the yellow line with the blue line is a strong signal to enter the market and buy a “call” option.
Moving Averages Strategy
This is one of the most popular strategies and it is used extensively in binary options trading where IQ Option is in play. It is used to full effect, profit wise by both experienced and rookie traders. You will use the available technical analysis tools to construct the moving averages indicator. The period indicates the number of candlesticks selected for the calculation of the moving averages. With this strategy employed by IQ Option’s clients, there are four types of moving averages. The difference comes with the method of calculation. The different moving averages are: simple, exponential, weightage and smooth.
Most of IQ Option’s clients are in agreement that the simple and exponential moving averages are the simplest to calculate and use to help generate signals. They are also the most accurate of the four. In most cases, the last two are used by professionals in highly specialized strategies.
The simple and the exponential moving averages are relevant with many trading strategies including following the corridor using the rebound line and the breaking line. They are also used in advanced strategies where construction of several moving averages is simultaneously carried out.
The Pin Bar Strategy
This is another of the more technical strategies that you can use with IQ Option. It will be used to predict a downward or upward trend with the price of an asset. What are studied here are pin bar candles with tails or spots.
If a pin bar candle has a small body and a long tail, directed upward or downward, there is an imminent shift in the price of the asset depending on the prevailing market conditions. If the tail of the pin bar points upwards, the price of the asset is predicted to move downwards. You will need to predict accordingly in that instant.
When the tail of the pin bar points downwards the price of the asset is predicted to go up. This is another signal and you will trade accordingly. A good pin bar with a tail is an indication that you should enter the market. What you need to be careful about is the direction that the tail is facing as this will be indicative of the prevailing market conditions.
Not all pin bars with tails are good. A good pin bar has to satisfy the following conditions:
- The open and close levels are placed next to the end of one of the previous bars.
- This must be near the top or bottom.
- The pin bars open and close levels are placed within the left bars also known as the left eye. If all the parameters are to the right, it means that the signal is strong enough to enter the market.
The Breaking Line Strategy
This IQ Option strategy aims to catch the exact moment that a candlestick breaches either the support line or the resistance line. When the candle closes above the resistance line, it is better to buy a “call” option. This is because the chances of the price of the asset rising increases dramatically.
When the candle closes below the support line, the chances of the price falling increases at a very high rate. At this point in the chart, you will buy a “put” option as it is the most favorable. This trading strategy is suitable for neutral, upward and downward trends.
This strategy is rather simple in its application mechanisms. Here, three smooth moving averages are monitored as they move along the chart. They will be displaying different moves and their respective time periods. What is important to note is that with this strategy, the moving averages must be of the smooth kind. This implies that the simple and the exponential moving averages will not work with this strategy, at least not with the IQ Option system. This is because the smooth moving averages have very little impact on ripples in the market or fluctuations with very little significance.
These moving average lines show the most likely price that the asset will have in the near future if the market is not under any undue influence from unexpected factors either within the asset’s market itself or in the wider global financial markets.
The smooth average lines of the candlesticks are looked at like they are alligator teeth. When the candles open upwards, it is the appropriate time for you to make a trade. This is a signal to execute a “call” option immediately.
When the candlesticks open downwards, it is a signal that the appropriate trade to execute is a “put” option.
When the indicators are twisted like a helix or intertwined in any way, it means the alligator is asleep; this is not the appropriate time to make any trades. Trading at this point may be tempting but the chances of losing your stake here is very high because the next possible move in very unpredictable.
In between the “call” and “put” trades, the indicators will twist again and you should rest your trading for a while.
The Bollinger Bands Strategy
Here, the strategy is applied with the price chart carrying three lines. These lines are not equal in thickness. Rather, their width will change according to the movements in the market. When an asset’s marketplace is calm, the bands will narrow. When activity resumes, the bands will widen. The rate at which they widen will depend on the intensity of the trading. Should you notice a rapid widening of the bands, you can be sure that there has been a sudden increase in the intensity of trading for that particular asset.
The band at the center represents a smooth moving average which will be carrying something like 20 bars/candles.
Trading binary options is a profitable venture. What you need is the right broker to handle your investment and to guide you to profitability. IQ Option is one of the leading brokers in the binary options marketplace. This can be seen from the deep understanding that they have of the binary options marketplace and the movements of asset prices. As evidenced by the sophistication of the trading strategies, it is how you interpret the price movements that determines the nature of the signals that you get.
There are many different free analytic tools for traders.