IQ Option’s Autoclose feature Pros and cons

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Platform Analysis: Pros and Cons of IQ Option’s Autoclose Feature

Knowing when to take profits isn’t always easy. Technical targets are one method, the autoclose feature is another but both come with risks that can cost you money.

Profit targets or autoclose, you be the judge

Knowing when to take profits isn’t always easy. Technical targets are one method, using an autoclose feature like the one at IQ Option is another. Both methods seek to lock in and maximize profits, but both come with risks. On the one hand a technical target may not be reached, or it may be exceeded, and on the other an autoclose may trigger well before a move is done costing you percentage points of unrealized gains.

Technical Targets – Technical targets are price levels on the charts at which prices can be expected to halt or reverse, or price levels a move is projected to reach based on past price movement. What I can say for these targets is that, over the 12+ years I have been trading and chart watching I’ve seen these targets hit time and time again.

Example of a technical target on the EUR/USD price chart

The only downside is that the time it takes for prices to reach those targets and what happens after they are reached is uncertain at best. This means that successful traders will have to sit and wait, watching for prices to reach their projected levels and decide; do I sell, or do I wait. If you sell you lock in profits and if you wait, you gamble on keeping what you have already worked hard to earn.

The Autoclose Feature – Autoclose is one of the most useful tools of the successful trader. It’s most important function is as a stop-loss. By setting the autoclose to sell out at a loss of 10%, 20% or 30% traders can protect their capital and live to trade again another day. Without it traders risk losing 100% of their trades as they watch prices move in the wrong direction and wrestle with the decision to close out. What many traders do not realize is that the IQ Option autoclose has two settings; the first is for stop-loss, the second is for taking profits.

Pros and Cons

  • Pros of Autoclose – When a trader sets the take-profits to close a trade they are taking all emotion out of the decision. When profits reach a satisfactory amount, the trade is closed no questions asked. This means they don’t have to sit by and watch the trade freeing them up to do other things. Another pro is that it only takes one touch of the target level for the trade to trigger. This means that if prices are volatile and only reach the target level for a brief period the trade will close.
  • Cons of Autoclose – When it comes to auto closure there is only one drawback, it can cost you money. I know that as many times as I’ve seen my profit targets reached I’ve seen them exceeded. This means that potential profits are often far greater than what I think is reasonable to expect. Setting the take-profit may guarantee a portion of the profit but it could cut you off from maximum profits.

How to use the autoclose feature

Using the autoclose feature is very simple. All you must do is set it to the percent of your capital that you want to protect in the event of loss or lock-in in the event of gains. A good rule of thumb for the stop-loss is 3% of the total account. If your total account is $10,000 then 3% of your account is $300 so set the stop-loss on every trade so you lose no more than $300. I like to set it so that my 3% of account is equal to about 30% of the trade. This means, in a $10,000 account, trades of $1000 are acceptable because you will only be losing $300 if it should fail.

Taking profits is a little more difficult but only because you want to lock in the most profits you can. I set my initial profit target at 50%. This means that if the trade should move up quickly and hit 50% I make $500 (assuming the $10,000 account balance). If prices begin to move in my direction but don’t hit my take-profit I then begin to adjust based on market conditions. The first thing to do it too slow raise the stop-loss to lock in more of your capital as the trade moves in your favor. The next thing to do is asses the technical targets for profit and the likelihood they will be reached; if necessary raise the take-profit limit to suit.

NOTE: This article is not an investment advice. Any references to historical price movements or levels is informational and based on external analysis and we do not warranty that any such movements or levels are likely to reoccur in the future.
In accordance with European Securities and Markets Authority’s (ESMA) requirements, binary and digital options trading is only available to clients categorized as professional clients.

GENERAL RISK WARNING

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.
87% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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IQ Option’s Autoclose feature: Pros and cons

Identifying when to take profit is not always as easy as it sounds. One of the options is to set a technical target, take profit or stop loss. Both options seek to lock in and maximize profits, but both come with risks, which is normal in trading.

The broker IQ Option offers for forex (CFD) trading a feature called „autoclose“, which is exactly what we want – to set a take profit and stop loss. The common feature of both is the intention to maximize profit which cannot be achieved without some risk. If you fail to set the target correctly the technical target may not be reached or be exceeded. What may also happen is that the autoclose feature triggers well before a move is done (to stop a promising trade prematurely) costing you some percentage points of unrealized profit.

Take profit is a price level on a chart at which price is expected to stop or reverse, or a price level a move is projected to reach based on a past price movement. This means that if the price touches this set line you will realize profit.

An example of setting take profit on the EUR/USD chart

The only weakness of this option is that the time it takes for prices to reach the target and what happens after they are reached is uncertain. If you want to succeed you must be patient and wait until the price reaches the projected level and then decide whether to sell or to wait. If you decide to sell you lock in some profit. If you wait, you face a risk that all that you have already worked hard for will have been in vain.

Autoclose: The Autoclose feature is one of the most practical tools of every successful trader. Its main benefit consists in setting a stop loss target.

By setting the autoclose to sell out at a loss, 5 to 15% traders may protect their capital from a total disaster and survive another day. Without having this tool they would risk losing 100% of their trades. Therefore, be cautious how much you tolerate to lose!

Many traders don’t even realize that the IQ Option autoclose enables two settings, one for stop loss and the other for taking a certain profit.

Stop-loss and take-profit are available to traders not only trading with IQ Option but with other brokers or those who use the MT4 platform! Read more in How to trade Forex inMT4.

Pros and cons

  • Pros: When you set the take profit and stop loss targets you take all emotion out of the decision. When profits reach a satisfactory level, the trade is closed without any questions. This means that the trader does no longer have to sit and watch the trade speculating „Shall I do this or that“. Another pro is that it only takes one touch of the hypothetical target for a trade to be done. This pro comes handy during periods of increased volatility when prices reach the target level for a brief period.
  • Cons: As to the cons of autoclose, there is only one: financial loss (or minimal profit). As many times as I’ve seen my profit targets reached I’ve seen them exceeded. I see the reason in the difference between the potential profits and what can be reasonably expected. Setting the take-profit at a certain level may guarantee a portion of the profit but it could only be a small portion of the maximum profits. Because trading should not be mixed with emotions I believe that these features are useful.

How to use the Autoclose feature

Using the Autoclose feature is very simple. All you must do is set it to the percent of your capital that you want to protect in the event of loss or lock-in in the event of gains. A good rule of thumb for setting the stop-loss level is 3% of the total account, which is – if your total account is USD 10,000 – USD 300. By setting a stop loss at this level you will prevent a higher loss than USD 300.

I personally set my target at 3% of my account i.e. equal to 30% of the trade. With the total of USD 10.000 on my account, trading volume worth USD 1.000 is acceptable because in the case of failing my loss will not exceed USD 300. Along with a percentage value, you can also specify the amount or number of pips.

Setting the take profit target is a bit more difficult but only because you want to lock in the most profits you can. I personally set my initial take profit target at 50%. This means that if the trade moves up quickly I will reach 50% and make USD 500 (assuming USD 10,000 on my account). If prices begin to move in the expected direction (without reaching my take-profit target) I then start to adjust based on market conditions. The first thing to do is to slowly raise the stop loss to lock in more of your capital as the trade moves in your favor. The next thing to do is to assess the technical targets for profit and the likelihood of being reached and, if necessary, to raise the take-profit limit accordingly.

Author

More about the author J. Pro

Unlike Stephen (the other author) I have been thinking mainly about online business lately. I wasn’t very successfull with dropshipping on Amazon and other ways of making money online, and I’d only earn a few hundreds of dollars in years. But then binary options caught my attention with it’s simplicity. Now I’m glad it did because it really is worth it. More posts by this author

Simple Breakout Strategy: Pop n’ Stop

The number of strategies that employ the use of breakouts is truly impressive. However, it is not always possible to monitor the price non-stop with the sole purpose of spotting the breakout. Even when it is possible, it is quite easy to miss the right moment to actually open the deal. Quite often traders who closely follow the price in a tight range don’t open the deal at the most suitable moment. The reason for that is simple: the price usually leaves the price range as a result of a sudden and powerful price move . The moment you spot this move the opportunity is already gone.

Some traders try to chase the move when it has already happened — usually with detrimental results. It turns out that trading breakouts is not always easy. The following strategy combines the breakout with the use of a particular candlestick pattern in order to address this exact problem.

On the screenshot above you can see a setup that is used to trade pop n’ stop strategy. It has several distinct features:

  • The asset is traded within a tight range,
  • The price swiftly leaves the established range and then falters,
  • A new support level is formed.

You should consider trading according to this strategy only if all of the above is present. Otherwise, the conditions are not met, and risks associated with the use of the following tactic increase manifold.

How to trade this pattern?

Sometimes the asset is traded in a narrow price range. It can happen due to several reasons. In fact, for the purpose of this particular strategy, it doesn’t matter what makes the asset trade in a range. The presence of the range itself is enough. The next thing that has to happen is a swift breakout, followed by a slowdown in the price action or a complete stop. From now on, all candles have to close above a newly formed support level, that has previously acted as a resistance level .

What are you supposed to do when you spot a combination like this? First, think about risk management. As one of the tools to manage their risks, traders utilize stop-loss orders .

There are two possible stop-loss levels that seem most logical for this set up. Conservative traders set their stop-loss orders at the closing price of the first green candle above the newly formed support line. Aggressive traders may choose the level of the support line itself. Situated lower, it gives enough room for the price action to move both ways.

The trader then opens the BUY deal when a confirmation is received. What is a confirmation in this case? Two green candles that close consecutively above the support line (as in our case) can be considered a confirmation. Another entry point is when the price goes back to the support line and bounces up. Again, a confirmation is required to minimize the risks involved. In any case, the support line is the tool that you use to identify possible entry points.

Likewise, you can trade the same setup in the opposite direction. In order to do so, you can wait for a significant upward movement and after the first negative candle that follows it, open a SELL position. Stop-loss is located on the reversal point and won’t let the price get too high.

Conclusion

There are several things you should consider when working with this strategy. First, it is generally considered to bear a high degree of risk. Therefore, you might want to try it on a demo account first, before you put real money at stake. For the same exact reason, the use of confirmations is essential.

Secondly, upcoming news and announcement can significantly affect the asset price, sometimes in unexpected ways. Consult the economic calendar before engaging in pop n’ stop trading.

Whether you are going to use this strategy or not it is definitely worth learning and trying. And remember that no matter what strategy you use, it cannot provide accurate signals 100% of the time.

NOTE: This article is not an investment advice. Any references to historical price movements or levels is informational and based on external analysis and we do not warranty that any such movements or levels are likely to reoccur in the future.
In accordance with European Securities and Markets Authority’s (ESMA) requirements, binary and digital options trading is only available to clients categorized as professional clients.

GENERAL RISK WARNING

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.
87% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    1st Place! Best Binary Broker 2020!
    Best Choice for Beginners — Free Education + Free Demo Acc!
    Sign-up and Get Big Bonus:

  • Binomo
    Binomo

    2nd place! Good choice!

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