Why won’t You Make Money Trading Options on IQ Option?
A lot of new options traders choose to join IQ Option for one specific reason – to earn fast money. Many people think that options trading is easy. All you need to do is to predict if the price of the underlying asset will increase or decrease and money will keep coming in.
However, this is not actually how it is. There is no such a thing as easy money in any type of trading and options trading is not an exception. You are trading against other traders that want to take money from you. And aside, a broker who wants to get his share no matter who wins and who makes a losing trade.
Actually, you are intended to lose money trading options. If you don’t do something about it. But what can you do?
Do you understand digital options?
Options are designated to let you make money on price movements of an underlying asset. You will not own the asset. You just determine whether the price will rise or fall by the time the trade expires.
What you will make heavily depends on the asset and the time you are trading. IqOption will give you a percentage of your invested amount as profit. This is commonly 70% and more.
That sounds very easy. So why do you keep losing money trading options on IQ Option? Trading demands knowledge of not only how options work, but also how to trade. You should learn to read price graphs.
Thus, you will know when it is best to trade and when it is best to stay aside. Apart from graphs, it is also very important to understand how several indicators work. Reading price graphs and applying indicators makes it simpler to develop a personalized trading plan.
Another essential skill to learn is which assets are best for trading. For instance, it is better to avoid cryptocurrencies if you can’t cope with super-volatile markets. And once you have chosen an asset, you have to also know when it is best to trade them. A big number of assets experience volatility after news releases.
Moreover, the return on a trade will steadily change during market hours. With these skills you are ready to begin trading. But it’s during the trading itself that you will lose money. Here are 2 reasons for that.
Two reasons why you lose money trading on the IQ Option platform
You do not know when to stop
Trading options may be exciting. But because of that, you may forget one important rule – when to stop trading. Not having a trading plan, you will not know when it is the best time to stop.
Trading constantly can tire your mind. As you lose your concentration, the possibility of incurring losses gets higher. A simple way to identify when to stop trading is by answering 2 questions: How much profit should I get before I stop trading?
How many losing trades in a row am I ready to risk before I stop trading for the day?
Using too many strategies
The question is, which strategy is the best and as old as trading itself. New strategies will always appear. Actually, no strategy is better than another. The thing that matters is how and when the strategy is used.
Your aim has to be determining a trading strategy you are convenient with. After that test it in the markets to approve it works. Discover in which market conditions it works best. Then apply it to make profits. Applying too many strategies may lead to loss of focus,which then will lead to losses.
Which route should you take when trading on IQ Option?
The way to successful trading on IQ Option is knowledge, a strong trading strategy and patience. Let’s talk about trading strategy and patience.
Developing a strong trading strategy
Simplest trading strategies are the best.
The best trading strategies are the simplest. We recommend that you first trade a single asset applying one strategy (3 candles, price action, trend following etc). After that decide which graphs and indicators to use with your preferred trading strategy.
Why? This lets you confirm the effectiveness of this strategy. For instance, trend following only requires you to open a trading position when you determine a clear trend. This enables you to concentrate on reading the market’s behavior.
Before you start trading using real money, make sure that you test your strategy on the IQ Option practice account several times.
Then decide on the amount of money you will invest in each deal. We also recommend to invest no more than 5% of your account balance in one single trade.
Patiently and religiously apply this strategy
Patience is one of the main skills you should learn as an options trader. You have to wait for the appropriate conditions before you open a trading position. This could be minutes, hours or even days.
Keep in mind that your money is at stake. If you trade simply because the market “feels right”, you’ll only lose your money. For most of the time, you will sit and monitor graphs on your IQ Option trading interface, waiting for the appropriate conditions to appear. That is all you have to do in case you have a strong and reliable trading strategy.
Your first aim: Wait for the appropriate conditions to appear
When you trade on an IQ Option live account for $10, it may take some minutes or even hours before the appropriate conditions appear. That is why we advised you to select one single asset and trade it on the practice account first.
Thus, you will have a sense when the markets are most favorable for trading. The great thing about this method is that you will not feel emotionally pressured to trade. This way, you will increase the possibility that your deals will be successful.
Your second aim: Identify how much you wish to make per day
If you have a particular daily profit target, it becomes simpler to decide how much to invest in one single deal. For instance, if your aim is $50, you may decide to trade 5 times and make a profit of $10 on each deal.
In other words, you will need to look for 5 cases where the market conditions are appropriate.