IQ Option developed the completely new trading instrument Digital Options. It’s the mix of best features of both binary options and classic. In Digital options trading you have a unique possibility: you can use a wide range of instruments to get profit. The manually selected strike price determines the digital options risks and profitability of each deal and is its main distinguishing feature.
Breaking Down Digital Options
Digital options example shows how trader can control the situation and choose either to get high profit with the same level of risk, or to get less profit with no risks. It can be simply done by adjusting the strike price. The potential profitability of the deal will be decreased when the trader will be moving the strike price closer to the current level of prices. But in this case the level of lose will be decreasing too. And conversely, by pushing the strike price further from actual level of prices, trader take an additional risk, with the hope of getting higher profit.
The core advantage of digital expiry options is that you can sold it before the expiration date. If the trend is moving in direction, which does not match the prediction, the trader can freely sold the option at any time. In the above video setting up a deal in a few simple clicks digital options explained. Below setting up the deal with digital options explained. The trader will only need a few clicks to succeed in it.
Trading Digital Options
- Choose the desired asset
- Choose the amount of money that he can allow to invest
- Select a strike price
- Press “PUT” button if he forecasts the price moves down, press “CALL” button — in case of price will go up
- The final step — expectation of the expiration time. In this moment, upon the situation, you choose: to sell the option prematurely or wait it to end.
Basically, digital options strategy is based on choosing the type of asset when setting up a deal and the two parameters:
- the strike price
- the amount of investments
But in total, the platform offers you a wide range of strategic options. Some traders prefer to trade in safeway and don’t consider variants with too far away strike price from the current price level. They simply dodn’t believe that price will reach the desired level. And at the same time exist traders who are ready to take huge risk to get much more profit.
Mitigating the Risk
Like in any other in the digital options deals, exist the risk management rules too. According to some thoughts it’s too risky to allocate more than 3% of trading capital to a single deal and it can ruin the long run trading.
The easiest and fastest way to learn different trading techniques, to get acquainted with all available instruments and to sort out in strategies is to use Practice account. We highly recommend practicing in it before start trading. In this case you can not be afraid of losing money. However, even if it happened you can trace step by step why everything went wrong and not repeat mistakes in future while trading with real money.
General Risk Warning: The financial products offered by the company carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford to lose.