IqOption Beginner’s Guide
Have you just decided to make a trading to be a part of your life? If yes, then you most likely have many questions, ant the main question you may have is: “How to trade?”. In this article, we will answer on the most essential questions beginners have and we will explain the main concept of how trading works. In other words, we will provide novice traders with the IqOption Beginner’s Guide.
On the IQ Option platform, all trading is performed with the use of CFDs or Contracts For Difference, and this means that when you open a trade, you don’t get the asset, but you invest in its price change. Your payouts depend on the forecasts that you make. If your forecast appears to be correct, you will get your investment back and also a specific premium, and this amount depends on a lot of factors. If your forecast is wrong, your investment will be subtracted from your balance.
There are 2 kinds of trades, Short and Long. If you click on a buy position, you open a long position, and this means that you believe that the price of the asset will increase after some time. If you click on the Sell position, you open a short position, and this means that you believe that the price will decrease. However, you may speculate on both negative and positive movements.
It depends on the asset you trade, but trades may close automatically and these are the trades that have a specific expiration time or there are deals which you have to close manually, which don’t have an expiration time. If you open a trade that doesn’t have a fixed expiration, you may keep it for how much you want to and you may close it when you want to, based on your trading strategy. Moreover, you may use different tools like Stop Loss, Take Profit and Trailing in order to close trades automatically after a specific condition was fulfilled. It will as well allow you to manage the desired risk-return ratio better.
How to analyze the market?
The decision you make about the direction of the future price movement identifies the result of your trade. Consequently, it is quite important to find out a lot about the behavior of the asset you want to trade. You can learn many things, if you watch video tutorials and read articles. It highly important that you understand how and what you are planning to trade before you place real money to a deal. So what do you need to do in order to make a right forecast? There are two main ways to analyze the market: fundamental and technical.
Fundamental analysis is based on the market news and earnings reports. Generally speaking, aspects that can’t be directly found on the price chart. This analysis approach is commonly used with long-run trades, but may as well help forecast volatility spikes and this are the situations when the price rises or decreases quickly.
Technical analysis, is base on the on the recent price changes in order to forecast the future. Technical analysis is carried out with indicators which apply specific calculations to the chart to help determine the trend, its direction, volatility, strength and other. You can apply a number of indicators simultaneously for the purpose of seeing the clearer picture before you make your next trade. All information which is needed for technical analysis, except of manuals and strategies, may be found on the price chart.
Both analysis may indicate at the asset behavior in the future. Nevertheless, note that any analysis is not able to give correct predictions all the time. All analysis types may give false signals from time to time because of the unstable nature of financial markets. You can’t be 100% sure what will be in the future and what will happen to the market, but you need to effectively use the information you get from the market as much as it is possible.
How to lose properly?
In trading, there is no a warranty that you will win or lose, it is always a probability. Consequently, it is important that you learn not only how to win but also lose correctly.
You need to be realistic about the financial result of your trading performance. Stay realistic about the financial outcome of your trading actions. You have to understand that trading is a not a fast way to become rich, if it was easy people like Warren Buffett wouldn’t spend ages in order to build up his wealth. Trading is more like a slow but stable path. Keep in mind that trading process is as crucial as the outcome you get and you will see that your skills improve after time.
Try not to be too much excited, even when you feel it is absolutely fine to be full of emotions. If you let your emotions flow, no matter id they are positive or negative, you have less chances to make a right forecast and, thus, get a profit.
Start from small, find the strategy that suits you the most and create a trading plan. Once you created a strategy, follow it and do not let your mind confuse you. Do not forget to obey by the risk management rules, because they might make or break most of your trades. It is risk management rules that will defend your money and turn you into an ambitious trader.
During your trading path you will have many more questions. Read our articles in order to learn a lot of things. You will get knowledge little by little, but the more you learn, the easier it will be for you to trade. Over time you will be more confident and calmer. What is the most essential, is that you made your first step.