Candles are a good way to judge the strength of the market on IQ Option based on their color.
Candles are one of the easiest way to determine the strength of a market. On the IQ Option platform, you'll encounter two types of candles.
The green candles signify that buying activity dominates the market. Orange candles on the other hand signify that selling activity dominates the market. When you observe consecutive green candles, the trend is going up. On the other hand consecutive orange candles show that the trend is downward.
This guide will show you how to use candles on IQ Option to trade for profit. Even though the analysis described above seems simple, it's what successful traders use as the basis for making money in different markets.
- 1 How do you use candlesticks in IQ Option?
- 2 Why trading candles is profitable when trading on IQ Option
- 3 Promotes placing a single trade at a time
- 4 Cons of trading candles only
- 5 Conclusion
How do you use candlesticks in IQ Option?
One of the advantages of using candles over other chart types is that they're easy to read. Candles on IQ Option come in two colours. A green candle is a bullish candle and an orange candle is a bearish candle.
There's no other way to read them. So if you see a bullish candle developing, all you need to do is place a buy trade and then let the candle to end before collecting your earnings.
But as simple as this sounds, few traders have developed the skill to read candles this way. That's why I've developed this guide. Let's get started.
Setting up your trading chart to trade candles on IQ Option
After selecting your asset, in my case I will use the EURUSD currency pair to trade options you next step involves setting up your trading chart.
Use Japanese candles with each candle representing a 5 minute time frame. Enter the amount you want to place on the trade.
Determining how long your trade will last
Your trades should be short to medium term. In this case, I will let my trades last for 5 minutes. I'll change this setting at the time feature on the right side of my trading interface.
The “purchase time” countdown will automatically adjust to 5 minutes in the future. Why 5 minutes? Once a green or orange candles on IQ Option starts developing I will be able to enter a trade immediately based on its color.
In addition, in most cases, if it started developing as a green candle it's likely that it will end green prompting me to hit higher.
Place your trade
This will depend on the color of your candle. If it started green click on the “higher” button.
Why trading candles is profitable when trading on IQ Option
No need to worry about price fluctuations
If you change from a 5-minute interval candle to a 2-minute candle, you'll notice that the prices of the 2 candles created are fluctuating.
Cut down the time frame to 30 seconds and you'll notice even more price fluctuations. These fluctuations are what makes many traders unable to enter into trades.
When considering the candle color only, you'll be certain that it will likely end up being that same color despite the price fluctuations that occur as time progresses.
Promotes placing a single trade at a time
Notice that I only placed a single trade based on the candle color in my example. If however I was focused on the price movement, it's likely that I would have placed multiple trades following the price movements.
But this strategy rarely makes money. If the prices go contrary to my position, I would lose a significant amount within a small time frame. My next trade would only be when a new candle starts developing and I'm certain that it will end in a specific color. That's how money is made!
Easy and simple way to make money Candles on IQ Option
In my trade, I did not rely on any technical indicators. Just the colors of the candles. This means that I won't take too much time reading indicators – a profitable trading opportunity might be lost during this time.
The only analysis I needed was to look at the patterns the candles made over the past 1 hour to 5 minutes using 5-minute candle intervals.
This initial analysis is important before you decide to enter a trade. In my case, I'll enter a trade within seconds after a candle starts developing. This is a confirmation that it's going to end the same color it began. I've created additional guides on how to make money trading candles. Be sure to read them.
Cons of trading candles only
Low profits when trading alongside Martingale system
The Martingale system advocates trading the same candle color continuously until you get a winning trade. In addition, you should increase your trading investment after you encounter a losing trade. If you win, you should invest the lowest amount again.
In scenarios where your first trades are winners, you'll only get a small return. But this is the better scenario. If your trades continue losing (although very unlikely) you might end up losing all your capital.
Takes a lot of time to learn trading with candles
As you might have noted, it's not just about reading candle colors. You must also identify how the markets have been moving over a particular period.
When using 5-minute candles in the IQ Option chart, I will usually start by looking at the trend over 3 hour, 30 minute and 15 minute time frames. This way, I will be able to recognize a pattern developing. In addition, for this method to be effective, you need to consider candles only (ignore special candles). This can take some time.
More of a skill than a strategy
There are many different trading strategies. These will show you what to do and in which markets. Using candles on the other hand is an acquired skill. And like any skill, it takes time to develop.
It's about knowing when exactly to enter your trade. If you miss the best entry point, chances of losing increase. This means that you'll have to practice a lot on the IQ Option practice account before you can confidently trade using real money.
How do you trade a 1 minute candle?
The same methodology could actually be applied to lower than 5-minute intervals. If you use a 1-minute chart, the trade should expire in 1 minute. So this is such a minor technical change. Remember, however, that on 1-minute candles the transactional finality is much faster. This makes the excitement of the trade greater. Controlling emotions in the trading process is the most difficult part of successful trading. Therefore, if you decide to trade on a low interval, practice the method carefully and repeatedly to gain confidence and to understand that the final result is the sum of winning and losing trades.
Trading with candles requires time and patience to learn and study the markets. Rather than trade based on price movement, you will be trading based on the candle colors. This can be your first IQ Option investment plan although it is not the answer to how to get free money in IQ Option. Every strategy needs practice.
Now that I've shown you how to trade using candles, try it out on your IQ Option demo account. I'd love to hear how it works out for you in the comments section.
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