When trading digital options on IQ Option, you can choose among different financial instruments. These include forex, commodities, stocks and cryptocurrencies. 92% of traders opt to trade forex options compared to the other markets.
The main reason is that these options have better returns that usually exceed 80%. The currency pairs on offer are numerous, giving you more alternatives to choose from. In addition, unlike cryptocurrencies, currency pairs don't have high volatility making them easier to trade.
Compared to stocks and commodities, price fluctuations in currency airs occur more often. This makes it easier to enter several trades per day. If you're interested in trading forex options on the IQ Option platform, this guide will show you how to choose the right currency pair.
- 1 How to choose the best currency pair to trade on IQ Option
- 2 Trade just one currency pair
How to choose the best currency pair to trade on IQ Option
Many of the currency pairs are affected by news releases. This means that at some point during the trading session, the currencies will experience some volatility. I would advise you to avoid trading during these times especially if you cannot handle the heat that comes with high volatility.
Steps how to avoid trading during times when news is released
The first thing to do is to identify when different markets open based on your timezone. For example, a trader in Vietnam will benefit from the open Asian and European markets during the day. The North American markets on the other hand are open when it's night time in Vietnam.
Your next step will be to identify when news releases are common in different markets. All market news are usually released in the morning. But, consider the markets. If a news item affecting USD is released, it will be late evening in Vietnam.
If a news item affecting GBP is released, it might be afternoon in Vietnam. Using this knowledge, you will have a good idea about when it's best to trade a particular currency pair without being affected by a news release. Using the above examples, you can trade the USD/GBP currency pairs during the morning hours.
During the evening sessions, you can trade the JPY/AUD pair to avoid any news released in North America.
You're probably wondering whether you should trade dozens of currency pairs trying to avoid volatility caused by news releases. I'll address this question next.
Trade just one currency pair
I know you think this would be leaving money on the table. With over 80 currency pairs on offer on IQ Option why would you want to concentrate on just 1 pair? The reasons are explained below.
Learn your currency pair inside out
In trading, knowing your market plays a huge role in your success. How much time would it take you to truly understand the over 20 currency pairs – and profitably trade them?
Choosing just one pair shortens the time between learning and trading. It also makes it easier to transition between trying out a strategy on the IQ Option practice account and implementing it profitably on the real account.
Now using the steps to avoid news releases when trading, you'll know the exact time frames it's safe to trade your currency pair. So you won't be pressured to trade every single hour of the day just to make profit.
You won't have many open trades running simultaneously
Think about this scenario. You're trading AUD/USD, JPY/AUD, EUR/USD and AUD/EUR at the same time. Now which one will you follow more closely? You want to make profit in all trades. But what if they all lose? That's a lot of money to lose at once.
Trading one currency pair allows you to follow the market closely. Even if a trade loses, you'll be able to analyze the charts and discover what it is you did that led to the loss. Also, trading just one pair means you won't need to learn how to use many strategies and indicators. It's time saved and potentially more profit for you.
Less mental strain
Consider the scenario I shared above. Having more than 1 open trade means you are increasing pressure on your mind.
Anxiety, fear, greed and other emotions are will eventually take over especially as the trades near their expiry. It becomes harder to concentrate. Once concentration is lost, it's very likely that your trading performance will decline leading to losses.
Trading a single currency pair reduces this mental strain. It allows you to focus on that specific trade without having to worry about how much money you could make or lose if you had several open positions.
Choosing the currency pair to trade should be a subjective decision only you can make. Following the steps I outlined above it should be easy.
Options Trading on IQ Option
Patience is required when trading one currency pair on IQ Option
In many instances, you won't find many suitable trade entry points when trading currency pairs. But whenever you find one, profits are almost assured. Trading options is a waiting game.
Now, to increase your chances of making money trading currency pairs, I would suggest using strategies that work both when the markets are trending as well as ranging. This will open up more opportunities to trade profitably.
What is your favorite currency pair on IQ Option? Why did you choose it and what's your trading strategy. Share your thoughts in the comments section below.
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