The digital options IQ Option or digital options should not be confused with binary options (which are the same offered by the broker in question) but which differ from the former since digital options are considered as a new trading tool deployed and developed from CFD broker / Forex IQ Option.
It is a completely innovative tool in that it is not only defined as a new type of financial instrument but also combines the characteristics of the classic and binary options.
The usual options have revolutionized the investment system CFD market (contracts for difference). From the first moment they had great success and this is due in particular to the high profitability proposed linked to the risk limited to the investment of the single operation.
In essence, the IQ Option digital option, unlike the classic options, offer everyone the opportunity to trade on a variety of instruments.
The profitability and risks of each transaction or trade depend almost exclusively on the strike price (considered as the exercise price chosen manually). It presents itself as a distinctive feature of digital options.
Let’s Know About The Digital Option with Investing in 2019
OPEN AN IQ OPTION DEMO TRADING ACCOUNT TO INVEST WITH DIGITAL OPTIONS
Risk warning:
binary and digital options are not promoted or sold to retail traders resident in EEA unless you are a professional customer.
CFDs are complex instruments and present a high risk of losing money quickly due to leverage: between 74% and 89% of retail investors lose money when they trade CFDs.
You should consider if you know how CFDs work and if you can afford to take the high risk of losing your money.
Digital options: what are they?
How to trade with digital options on IQ Option practical guide
What are the differences and advantages of digital options compared to binary options
By choosing to invest with digital options the trader will have to choose whether the price of the chosen asset goes up or down in a given period of time. This concept does not differ from that of the binary option. What changes is the approach to trading; in this case, it is the trader who chooses the strike price or the exercise price.
What does this mean?
It means that it is the trader who has the potential in his hands to select a hypothetical profit that he can obtain through a digital option.
In the event that you opt to set a high strike price or exercise price by choosing to invest with a CALL or SU option, you can get a profit. In this case, up to 900% of the investment could be earned if the transaction closes positively.
If you choose an exercise price that is just a little higher than the current price of the chosen underlying asset then you will be able to earn just 100% of the invested capital.
Attention then to always keep in mind another principle. The greater the distance of the strike price from the current price of an asset, the greater the risk of losing.
This means running the (high) risk that the digital option does not close positively. This is why the returns are considerably higher in the case of a correct forecast.
All digital options can be closed using the appropriate tool: “buy out” or advance sale which allows you to sell the options before the natural maturity.
IQ Option Digital options: how do they work?
We have seen briefly what the digital options offered by Iq Option are. Let us now examine another very important element: their functioning.
We have also said that digital options offer very high yields. They offer a high degree of manual trading management and at the same time a potential gain that is considered greater than the binary options, whose profitability is predetermined.
Now, thanks to the IQ Option digital options all traders can choose to vary the amount of profit and at the same time also the associated potential risk.
Such as? Simply adjusting the strike price.
When selecting the exercise price near the current price level, the system will reduce the potential profitability of the transaction. This also means limiting the amount at risk.
In the opposite case, the trader will be able to assume additional risk by pushing the strike price beyond current prices. In this case, we have to do nothing but hope to get a higher profit (obviously the risks of the transaction increase).
Attention then to the fact that digital options can be sold even before the actual expiry date.
By choosing to invest with digital options you will always have the option to sell the options before it expires. However, be careful to always do it within a maximum time of 20 seconds before the option expires.
If the trader believes that the trend is taking the wrong direction, he can opt to sell the digital option.
How to trade with the IQ Option digital options?
In order to trade with digital options and Iq Option the following steps must be followed:
Choose the asset or underlying asset on which you want to invest;
Choose the amount of money you want to invest in the transaction;
Select a price strike or exercise price;
Click on:
“CALL” or “SU” if you opt for strategies that see the price go up.
“PUT” or “DOWN” if you opt for strategies that see the price fall in value.
At this point, there is nothing to do but wait for the option to close or expire.
You can set two parameters:
the type of underlying asset to be taken into consideration when opening a digital market option ;
the amount of money you want to invest including the strike price or the strike price.
You can also choose to set up to 22 different strike prices or strike prices. This means being able to open a very high number of options with different prices. This is a possibility to be taken into consideration as it makes it possible to differentiate the market entry strategies.
It is also important to note that the number of digital options available is quite high. This is also a determining factor in choosing the broker with whom you want to invest.
There are traders who consider it improper to choose an exercise price or ” strike price ” far from the current price level. This is because they believe that the price will never reach the desired level. at the same time, there are traders who could choose a different price; that is, they will choose a higher or lower value than the strike price exercise and say they are ready to accept the additional risk and pursue higher returns.
IQ Option digital options – Practical/illustrated guide
Let us now turn to the practical example and to the Italian video explanation of how to trade with digital options. We can only do this after having verified what the IQ Option digital options are and how they work.
The first step to accomplish, as always, is to access your own Iq Option trading account. It doesn’t matter whether it’s real or demo. The procedure is identical.
Following access to the IQ Option account on the broker’s homepage, we find a screen (the traditional one) of the IQ Option trading platform.
All you have to do is click on “+” at the top of the platform and open a new asset. You can do this by choosing from those offered by Iq Option.
How to trade with digital options on IQ Option illustrated practical guide:
Step 1:
At this point, just click on “Digital”.
Note that the number in brackets indicates the digital options currently subscribable. Obviously, you must choose the asset on which to invest, between:
- Equity securities.
- Stock indexes.
- Currency pairs.
- Raw material.
The first difference that immediately leaps to the eyes of the trader is that digital options with respect to binary options do not have a fixed payout as is the case for binary options. With the IQ Option digital options, Payout is not fixed and a lot depends on how prices move.
As with classic options, digital options can be closed early, or when desired.
Finally, a strike price must be chosen, which represents the set price to be reached.
At this point, all you have to do is choose the asset on which to invest. For example, we could choose the EUR / USD asset.
This will be the exchange rate on which we want to invest with the digital option. At this point, the following screen will appear. Note that this is very similar to that of binary options.
Step 2:
Now we just have to put the last step into practice. You must choose the most appropriate direction.
In our case, the choice of strategy based on the euro/dollar exchange rate must be such as to define its direction. In practice, if the strategy, provides an appreciation, we will click on the UP button. Otherwise, if the strategy foresees a depreciation, we will click on GIU. Of course, it is also possible to change the investment amount. Basically, it is set at 1 euro.
Step 3:
As can be seen from the images shown, different exercise prices have appeared. Each of these corresponds to a different potential profit.
If you choose to wait for the end of the investment transaction, we can understand what the profit level will be based on the change in the exercise price. Otherwise, it is better to sell a position in advance.
IQ Option digital options: how to reduce the risk?
There are precise rules governing the risk management of options. This also applies to digital options. There are traders who, in hindsight, consider the allocation of more than 3% of capital in a single transaction or digital option, as a risky and risky choice.
It is very important for them to study everything very carefully before they even start investing. The asset with which you want to invest and the investment time must be studied well. This translated into other terms means taking all the time necessary to learn and practice different trading models including trading techniques.
It would be advisable to practice a lot before investing with a real account, with a demo account or simulated account!
Iq Option Mobile digital options
Investing with the IQ Option broker also means being able to invest when and where you want it. Such as? Thanks to the IQ Option mobile app!
The mobile app allows all traders to invest with digital options in complete mobility. They can do this by directly downloading the Apple-Android or iOS mobile application.
Digital options are also considered the future of trading options, as they allow you to trade with CFDs, always setting a low risk on a single market transaction.
Finally, it is very important to point out that when working with traditional Forex trading, all the capital deposited in the broker’s trading account is suitable for maintaining its market positions due to financial leverage. Only the margin call or margin call protects your account from going negative.
By choosing instead to invest with digital and classic stock options, the amount at risk is considered as the amount of the single transaction entered on the market. The set trading risk will, therefore, be very different.
Hand presenting the business concept
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