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Digital options from IQ Option come with a unique and adaptable risk/reward profile. These options are based connected the ladder mode of trading and use strike prices. Each option comes with a variety of strikes including those that are out, near or in the money. This style provides traders the ability to take advantage on their trades in a way of life that standard and binary star options sensible can't reduplicate. Using the strikes to maximum advantage can be a minute tricky, and in both cases counter intuitive, but once mastered volition boost rewards and cutting losses. It's all about apply scheme.

When using digital options, traders indigence to understand there are 3 types of strikes; in the money (ITM), at the money (Cash dispenser) and out of the money (OTM). In the case of calls an in the money strike is infra the plus circulating price and theoretically already profitable. At the money strikes are at or near the asset current price and theoretically a 50/50 chance of winnings. Out of the money strikes are in a higher place the asset current price, contain more risk and give higher rewards.

Obviously, strikes that are in the money are less risky because they are already profitable; all these strikes need is for the plus monetary value to remain supra the strike until death. That is, no movement pays off. Strikes that are knocked out of the money are riskier since they deman plus prices to incite systematic to pay. The further out of the money the strike is, the riskier the trade.

The job for traders is that the OTM strikes are selfsame risky, especially when it comes to short-change expiry positions like digital options. There is a much greater chance for the option to close OTM than there is for information technology to close ITM, which will resolution in loss for the trader.

The key is informed when to use an ITM strike (less risk to the trader, lower payout) and when to use an OTM strike (to a greater extent risk to the trader, greater payout).

Applying technical analysis

This is where technical psychoanalysis inherit romp. Technical analysis is the scientific observation and measuring of financial markets. Specialized tools wish support and resistance, momentum indicators, volatility gauges and others are used to determine entry and exit points supported past performance and future expectations. Some of these introduction points are, naturally, better than others and consequently can be considered a "strong indication" versus a "weak one".

Because of these traders need to glucinium able to rank their indications into 3 categories; weak, normal and strong. A weak indication should be used with the ITM strikes because information technology is indicative of apparent movement, but probably not enough movement to go by an OTM strike price. Using an ITM strike gives a greater chance to win, but a win at a much lower profit point. A normal indication can be used with ATM (at the money strikes) with a fair degree of confidence. This type of indication suggests a strong move and high likelihood of profits only not of necessity strong enough to use an OTM strike. A strong indication of Price social movement tooshie be used with OTM strikes with a high arcdegree of trust. It's also important to keep expiration time in mind.

Lease's get back to signals. What makes a strong signaling as compared to a weak one? Keep an eye out for what I call convergence of indicators. A individual tool indicating a bullish or bearish entry is tradable, but information technology is not as strong American Samoa two operating theatre three indicators communicating the same entry.

EUR/USD indicators

Hold instance a stochastic optimistic crossover. This a binding bullish entry signal merely is much more powerful when confirmed aside MACD, or when prices are breaking through resistance operating room revolt from financial backing. An even stronger indication for entry would admit a 3rd or even a 4th tool confirming the move.

EUR/USD graph with price move

When one tool confirms a move, information technology is a weak indication, when more than 1 confirm it can represent called a "average" indication, and when 3 operating theater more converge on i entry place it can be named a strong signal and ill-used with OTM scratch prices. Weak indications can use ITM strikes to enhance win rates at the cost of lower profits. Strong indications, a convergence of indicators, can use OTM strikes to heightendannbsp;returns at the risk of lower win rates. To put IT in view, using indicators can embody of real value, so it's by all odds worth giving them a go.

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