Many professional traders will agree that the easiest way to make money on IQ Option is by using the simplest strategy. This means relying on simple signals such as candle colors. But unless you know how to read candle colors by themselves, you’ll need to use them alongside one or more indicators.
In this guide, I’ll teach you how to use candle colors with Bollinger Bands to trade on the IQ Option platform.
- 1 Setting up Bollinger Bands on IQ Option
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Setting up Bollinger Bands on IQ Option
Bollinger bands are one of the most popular types of indicators among traders. To learn more about this indicator, the Guide to Trading with Bollinger Bands on IQ Option is a must read.
To set up Bollinger bands, click on the indicators feature on your trading interface. Next, select popular and finally select Bollinger Bands.
The standard period of B-Bands is 20 and the deviation is 2. Let these settings remain as they are on your IQ Option trading interface.
Once, set up, you chart should look like the one below.
How to trade using Bollinger Bands
When trading using this indicator, your objective is to look at where the upper and lower bands cross a candle.
If the upper band crosses a bullish (green) candle, it’s an indicator that an uptrend is imminent. If the lower band crosses a bearish (orange) candle, it’s a signal that a downtrend is imminent.
Using the chart below, the lower band crosses a bearish candle. Since I’m using 1 minute interval candles, I would enter a 5 minute sell position.
Examples of trading candle colors alongside Bollinger Bands
Using the chart below, the lower band crosses a bearish 5 minute interval candle. My trade entry point will be at the open of the next bearish candle. The trade position should last 5 minutes.
This ensures that the trade will close in-the-money. If I were to enter a 15 minute position, the trade would end even. The reason for this is that the close of the bullish candle is at my trade entry point.
Tips for trading using candle colors alongside Bollinger Bands
As mentioned, your primary objective is identifying where the upper and lower Bollinger Band cross candles. However, how long you hold position largely depends on the candle time intervals.
If you’re using 1 minute candles, your trades should last 5 minutes. If one the other hand you’re using 5 minute candles, your trades should also last 5 minutes.
If you look at the chart below, The upper band crosses a bullish candle. The close of this candle is my trade entry point. Since I’m trading 5 minute candles, the trade should only last 5 minutes. If I were to open a 10 minute position, the trade would be unprofitable since the next bearish candle closes lower than my trade entry point.
Using Compounding to trade this strategy
I suggest you trade 3% of your account balance when using this strategy. For example, if you have a $100 account balance, you should only trade $3 in your first trade.
If the trade is profitable, use your return plus the initial investment in your next trade. 3 winning trades should get you a 20% return.Take a look at the table below.
Trading psychology principles to follow
You should have a target profit each time you trade using this strategy. For example, using the table above, your goal is to make 20% return on your initial account balance. Once this target is reached, you should stop trading.
Avoid placing two or more consecutive positions based on a single candle. In most instances, you’ll find that once you’ve entered position, the prediction is correct. You might be tempted to enter a similar position based on this. However, remember that success using this strategy also depends on your trade entry point. This should always be at the close of the candle that the band crosses or the open of the next candle.
Trading Bollinger Bands alongside candle colors is one of the simplest strategies to make money on IQ Option. It will require some practice and patience to fully master this strategy. However, once mastered, you should be able to start getting good returns.
Have you traded using candle colors alongside Bollinger Bands. Please share your views in the comments section below.
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