Trend is a friend. This saying should always be kept in the minds of traders consciously. The first lesson when you first get into the financial market is to follow the trend.
But what does following the trend mean? What is a good entry point? How to enter a trade with a high winning rate?
In this article, I will show you how to trade options by combining the Alligator indicator with support and resistance in IQ Option. In addition, I also have some detailed entry points at the end of the article.
IQ Option trading strategy: Alligator indicator with Support and Resistance
If you want to have a good start, it’s important to prepare and set up carefully. Use your knowledge and trading skills as a stepping stone to make money in this market.
Basic settings in IQ Option
Select trading assets: AUD/USD, USD/JPY, EUR/USD.
Japanese 5-minutes candle time period
The expiration time is from 15 minutes or more.
All you need to do is to identify the main trend. If it is an uptrend, focus on opening HIGHER options. On the contrary, if the trend is downward, focus on LOWER options. In a sideways trend, step aside and do nothing.
Alligator indicator in the uptrend: 3 lines move up.
When Alligator indicator is in the downtrend, 3 lines move down.
You can learn how to use Alligator indicator in the article: Alligator indicator – How to use and trade in IQ Option.
How to enter a trade
Remember: Trend is your friend.
Uptrend => Only open HIGHER options.
Downtrend => Only open LOWER options.
The signal to open options will be the support or resistance zone.
HIGHER = Alligator indicator moves up + Support zone.
Explain: When the price is in an uptrend, there will be temporary decreases to gain momentum and increase later. If the price decreases and touches the support zone, it will bounce back. This is the best, safest opportunity for you to open a HIGHER option with a 15-minute expiration time.
LOWER = Alligator indicator moves down + Resistance zone.
Explain: In a downtrend, price will tend to increase temporarily then bounce back and continue to fall. And when the price increases and hits the resistance zone, it is an opportunity for you to open a LOWER option.
Capital management strategy
This is a trading method that gives you a 60% win rate (10 options – 6 wins). Therefore, a suitable capital management strategy will be Classic. Use the same amount for every option.
It is important that you choose the amount of money you bet on a trade. For professional traders, the amount of money on their trades will be from 2% – 3% of the total capital. For example, the total money they deposit into their IQ Option account is $200. Each option will be from $4 to $6. If you are new, you only need to open $1-$1-$1 trades.
Classic capital management strategy does not give you a high rate of profit. But in return, your capital is always safe. At the same time, the money you earn will increase steadily over time.
Some rules you need to keep in mind
Identifying trends is the first and the most important thing. If you can’t do it, don’t open any trades.
You should use long-time trades. For example: If you observe a 5-minute Japanese candle chart, the expiration time should be from 15 minutes or more. It is because the price will follow the trend in the long term.
When you have reached the maximum number of options in a day or gained a suitable profit, you should stop. Options is a very rough game. As soon as you are greed and let emotions overwhelm your mind, you will lose money for sure.
Review IQ Option entry points
Option 1:
Alligator indicator goes down => Downward trend => Wait to open a LOWER option.
Signal: Price increases temporarily and retests the resistance zone => Open a LOWER option with a 15-minute expiration time.
Result => Win.
Option 2:
Alligator indicator goes up => Uptrend => Focus on the HIGHER option.
Signal: The price falls and retests the strong support zone then creates a red candlestick => Open a HIGHER option with a 15-minute expiration time.
Result => Win.
Option 3:
Alligator indicator is down => Downtrend.
Signal: The price rises temporarily and hits the resistance zone => Open a LOWER option with a 15-minute expiration time.
Result => Win
Summary
This is a very simple strategy. First, use Alligator to identify trends. After that, use the support and resistance level to have a clear entry signal.
You should open your IQ Option demo account now and test this trading strategy. It will surprise you a lot.