- 1 What is the best indicator for IQ Option
- 2 Guide to trading using the EMA indicator on IQ Option
- 3 Setting up the EMA indicator on IQ Option
- 4 Trading IQ Option using EMA14 and EMA28
- 5 Trading IQ Option using the EMA30
- 6 And what is your best indicator for IQ Option?
What is the best indicator for IQ Option
This is probably the most frequently asked question of novice traders: what is the best indicator for IQ Option. IQ Option platform stands out from the competition with its wide availability of indicators for technical analysis. Together with various variants, you can count dozens of them. You will find momentum indicators, trend indicators, volatility indicators, a rich family of averages, volume indicators and others. I sincerely doubt if any binary options broker has a better selection of indicators in its platform.
So which indicator is best for options trading?
There may be as many answers to this question as there are traders to whom you ask this question. However, we have chosen the EMA, or Exponential Moving Average. It is apparently just one of many types of moving average. Why is it our number 1 indicator on IQ Option? First of all, it is the most frequently used technical analysis indicator. Secondly, its construction and the arithmetic behind the indicator are easy to understand. Thirdly it can be used in at least several ways. In today's article, we will tell you more about our best indicator for IQ Option.
Guide to trading using the EMA indicator on IQ Option
The Exponential Moving Average (EMA) is a moving average indicator. Moving Average indicators are trend-following indicators which smooth out price data creating a line that follows the trend.
Many traders opt for the EMA over the Simple Moving Average. The reason for this is that EMA reduces lag by placing more weight on the most recent prices. For example, when using a 30 period EMA the weight is placed on prices over more than 30 days.
Setting up the EMA indicator on IQ Option
After logging into your IQ Option account, set up your Japanese candles chart.
Next, click on the indicators feature and then select moving averages. Next, select the Moving Average.
Adjusting the moving average settings
On the moving averages window, select a period greater than 10 (for a more accurate EMA). Next, change the type to EMA. On IQ Option, the default color for the EMA is orange. Finally, click on Apply to save the settings.
In our first example, we'll trade using the 14-period EMA and 28 period EMA. You'll need to repeat the set-up procedure twice to create the two EMA lines. For the EMA 28 change the color to yellow. For the EMA14 change the color to green. Remember to click on apply when you're done.
Trading IQ Option using EMA14 and EMA28
When trading using the EMA14 and EMA28, your objective is to identify where the two indicators cross each other as well as the distance between them as they track the prices.
When the EMA28 crosses under the EMA14 and the distance between them is wide, it's a signal for a strong uptrend. The prices are above both indicators. You should enter a buy position. As the gap narrows, the uptrend is almost exhausted.
When the EMA28 crosses over the EMA14 and the gap between them widens, it's an indicator of a strong downtrend. Here, the prices are below both indicators. You should enter a sell position.
When both indicators run through the prices, the markets are ranging. At this point, it's best to sit on the sidelines and wait for a trend to develop.
Trading IQ Option using the EMA30
Another commonly used EMA is the 30 period EMA. It's usually used to identify a developing trend. In the chart above, you'll notice a developing uptrend.
But you don't know exactly where to enter a buy position. The EMA30 can be used for this. Right where the EMA30 cuts the price (bullish candle) from above and runs below the prices, this is your entry point.
Now let's take a look at a trend reversal to bearish.
In a bullish trend, the EMA30 indicator runs below the price. In the image above, you can see the indicator cut across a bearish candle and starts moving above the prices. This is a good place to enter a sell position.
The EMA indicator is one of the simplest ways to identify a developing trend and trend reversals. Simply looking at the position of the EMA line relative to the prices will tell you whether the trend is up or down. In addition, once the EMA cuts through the price, it's a signal that the trend is reversing.
Remember I mentioned EMA with periods greater than 10 provides better accuracy. This makes EMA indicators best for IQ Option for trading longer time frames.
And what is your best indicator for IQ Option?
We do not impose our opinion on anyone. We simply believe that using EMA is relatively easy and intuitive. Technical analysis describes hundreds of different indicators. However, most of them are more or less based on moving averages. These averages belong to the so-called lagging indicators. They react with a certain delay to price changes. This is a disadvantage which does not disqualify them, but should be borne in mind.
As with all methods, training is very helpful here. I know traders who use nothing else on their charts except the EMA20. What is more, they do not use it to generate signals from e.g. price crosses. They use this average and its relation to the price chart to analyse what is happening on the chart. As they have been using this tool for a very long time, they are able to visually assess with quite high certainty how a given slope of the average, its distance from the price chart affects its possible future direction. This can be called the art of chart reading.
Now that you know how to set up and trade with the EMA indicator on IQ Option, try it out on your practice account.
Thank you for reading, Good luck!
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