Guide to Trading Using Price Action and Candlesticks on IQ Option

Many traders have asked about how price action play role in trading, how to trade based on price action or if they can trade on the basis of candlesticks only.

Well, both are methods that do not require the use of indicators. Just study the chart and analyze the price movement. So, in this guide, you can get the answers to your questions and details about trade using both methods.

2 trading methods you can use to trade on the IQ Option platform

Trading using candlesticks on the IQ Option platform

First, we will talk about trading with candlesticks as it is quite simple. The one thing you need to remember while trading with candlesticks is to remember their colours. If the candle is green, the bulls are dominating the market and a situation to enter a buy position and if the candle is orange, the bears are dominating the market and a signal to enter a sell position.

The main dilemma that traders have is exactly where to enter into a position. To get the proper idea you should first wait to end the first candle and another to start. Do not enter a trade when the candle is halfway. Your main goal should be to look for a solid candle. The main reason to avoid the special candle is that its high wicks appear in times when there is high volatility in the market. The price will go against you by the time your trade expires is very likely at these times.

Let’s look at an example.

In this example, digital options are used. You can use either, options or digital options on the IQ Option platform.

Wait till the candle develops completely and after the second candle starts to develop at a minute that is divisible by 5, enter the position.

Consider a candle that developed prior to the 9.55 am point (orange) and the prediction was that the price will drop. So the position entered was a sell position lasting 5 minutes.

Trading with candlesticks only ask for the candle colour, you do not have to worry about the price. However, you’ll also need to take into account the previous two or more candles. You can expect more orange candles along with the downtrend.

Trading using price action on IQ Option

Now talking about price action trading. It involves the study of the price direction taken at a particular movement. In this approach, you will determine if the price will be higher or lower by the time your trade position expires.

In this example, trading with digital options IQ Option.

First, you look at the price chart in the below example, notice the resistance level that is represented by the blue line which is the price bounced off. The prediction was that there will be a rise in prices immediately but this created a consolidation range and an uptrend is developed. As the prices were rising continuously, 5-minute buy position was entered as the expectation was that the price will go up.

The rule is, first identify the price range, then decide whether the price will rise or fall when the breakout occurs. And after the breakout, all you need to do is enter a buy or sell position.

It does not mean that if you are in the 5-minute trade and your position will be held for 5 minutes exactly on IQ Option. In this trade, the position entered at 14.06 pm and the trade expired at 14.10 pm.

You need to act fast when you are trading with price action. You need to analyze the price moment and direction continuously over a period of time before trade entry. It will be really easy to make winning trades once you have identified a good entry point.

Never trade with your gut

Trading using both candles and price action requires a specific set of conditions. For example, with candlesticks, you should only trade when an apparent trend appears and candles have large bodies.

This requires patience and proper chart analysis.

Never trade on the basis of your gut feeling. It is simply relying on luck. And in the financial market, good luck is not a constant thing and will not make anybody wealthy

Never forget to follow the rules, whether you are using candlesticks or price action methods. Both seem very simple but if applied incorrectly, they can do blunders and you will lose tons of money.

Be sure to test the candlesticks and price action trading methods I’ve explained in your IQ Options practice account. It might take time to grasp each method fully but once you get it, trading will be simpler and more profitable in the long run.

Good luck!