Difference Between Digital Option And Binary Option

DIGITAL OPTIONS TRADING WITH IQ Option – HOW TO & REVIEW 2022

This fabric is not intended for viewers from EEA countries. Digital options are not promoted or sold to retail EEA traders.

Note:
Your capital is at hazard

What are Digital Options?

Digital options are contracts that enable traders to speculate on the curt-term price movements of different assets. As with other types of options, the potential payout on a particular digital choice contract is calculated with a specific strike toll every bit reference. The distance of the strike toll from the electric current market price and whether the strike price is to a higher place, below, or at the current market place price are some of the factors that determine the potential payout of a digital choice trade. The time left to expiration and the implied volatility of the underlying instrument also take a direct touch on on the potential payout of a digital option trade, provided that the strike toll is non equal to the current market place cost at the time of execution.

What is the Departure Between Digital Options and Binary Options?

The principal difference betwixt digital options and binary options is that with digital options, traders tin can choose between a range of different strike prices when entering a trade. Apparently, if the strike price is altered, the potential payout is altered every bit well. With binary options, the current market price is the simply strike price available to traders.

Another important difference between IQ Option’south binary options and digital options is that with digital options, the toll at expiration has to exist across the strike price for the trade to expire in the money (ITM). If the toll at expiration is equal to the strike price of the option, the trade expires out of the money (OTM) and the trader loses his investment in that trade.

With binary options, however, a trade that expires at the same price as the strike cost results in a apartment merchandise ($0 turn a profit/loss). This is why you will typically find that digital options that are traded in the ‘Current Price Fashion’ generally offer higher payouts than binary options (considering the slightly higher risk of losing a digital options trade is compensated by its payout being college).

How to Trade Digital Options With IQ Pick

Different Strike Toll Modes

The potential payout of a particular digital selection trade is direct influenced past its strike price. There are 3 different strike price settings with which trades can exist initiated:

1. Current Price Mode (Basically the same every bit trading binary options)

When ‘Current Price Mode’ is activated, the strike price and the current market place cost (mid price) are always the same. And so, when you lot enter a trade, the strike price you lot reach will always be the live market place price you run into on the correct side of your chart. Sometimes your trade may be filled at a unlike strike price considering of execution latency when the market moves earlier your order request reaches IQ Option’s servers. But for applied purposes, allow’s just say that your order volition be filled with a strike price which is equal to the market price at the time of execution.

Here is an example of what it looks like when ‘Current Price Mode’ is activated:

In this example, the payout is 87%. This is the same for ‘Higher’(light-green push) and ‘Lower’(red button). When trading digital options in this way, it’south basically the aforementioned equally trading binary options. Equally already explained, the just difference is that a digital option trade cannot produce a $0 profit/loss at expiration, while a binary pick trade can.

2. Machine-Selection of the Nearest Strike Price

In this mode, the nearest strike price loosely tracks the current market toll, frequently in a delayed fashion, bouncing around in a staccato-like manner. Sometimes, the strike price is equal to the market price. At other times, the strike price may be above or beneath the electric current market price. Whenever the strike price is not equal to the current market cost, at that place is an ‘imbalance’ between the payout percentages for ‘Higher’ and ‘Lower’ considering the probability of the option expiring higher up or below the strike price is no more a l/50 chance. Hither is an example of what to expect in this mode:

In the nautical chart higher up, the strike cost and the market price are at different levels. The payouts for ‘higher’ and ‘lower’ are also notably different, every bit seen in the white circles.

Trading digital options in this mode can be tricky for beginners because the strike price bounces effectually and may be situated at different distances from the current market toll, causing the payout percentages for ‘college’ and ‘lower’ trades to frequently fluctuate.

3. Manual Choice Betwixt Unlike Strike Prices:

In this way, you can manually choose between a range of dissimilar strike prices which are displayed at the right side of the chart. This range of strike prices is too presented in a list which tin can be accessed by clicking on ‘Time’ in the superlative-right corner of your screen. Here is an instance:

For this mode to be active, the tick box next to ‘Auto-selection of the nearest strike price’ needs to be unticked. In the screenshot above, yous can run across this in the white box with the white arrow pointing to it.

When you have unticked the tick box to activate the ‘manual strike toll mode’, this mode will automatically switch back to the ‘Car-selection of the nearest strike price’ style as soon as the ‘Purchase Time’ of the pick runs out. If you have an open trade on the instrument you lot’re looking at, the switch will happen 5 seconds before the ‘Purchase Time’ runs out. So if you prefer trading in the ‘manual strike toll way’, you will have to activate it each time you open a new chart and each time the ‘Purchase Fourth dimension’ runs out. The ‘Buy Time’ is indicated by a vertical white dotted line marked with the words ‘Purchase Fourth dimension’. This is what information technology looks like:

When you lot are in the ‘manual strike price style’ and you click on a sure strike price, that strike price will remain selected until you click on another strike price or until the buy time of the option runs out.

Different Expiration Times for Digital Options

Digital options can exist traded with 3 different expiration times:

• 1 Minute
• v Minutes
• xv Minutes

Trades tin be entered late or slightly early, which means that actual expiration times may be shorter or slightly longer than the 3 periods mentioned above. Please note that the bachelor expiration times can change from time to time.

Closing Digital Option Trades Manually

Digital selection trades can be closed at any time before expiration. To meet how much you will win or lose if yous close a trade prematurely, look at the ‘Profit Later on Sale’ amount which is displayed at the tiptop of your screen. To shut a trade, click on the ‘Sell’ button at the top of the screen or on the ‘Close’ button which is situated on the candlestick where the trade was opened:

Minimum and Maximum Trade Size on Digital Options

You can place a digital option trade with as trivial as $ane. The maximum trade size is $twenty,000.

Digital Pick Instruments Available

EXAMPLES OF DIGITAL OPTION INSTRUMENTS You lot Can Trade.

Standard digital options are available in over 8 currency pairs and several cryptocurrencies. These instruments can exist traded 5 days a calendar week from Mon to Friday at sure times during the twenty-four hours. Each instrument has its own trading times. For example, the USD/JPY digital choice tin can be traded between 00:30 and twenty:45 GMT. To run across the market times for each digital choice instrument, simply click on the info button at the height-left of the chart so cull the ‘Trading Conditions’ option.

OTC (over the counter) digital options can be traded from Friday evening to Sunday evening when traditional financial markets are closed. For example, the EUR/USD OTC digital option is tradable between 21:05 GMT on Fridays to 20:55 GMT on Sundays. OTC digital options are available in over x currency pairs.

Payout Percentages (Profitability Percentages)

Payouts on Trades With Manually Selected Strike Prices

Digital option trades of which the strike prices are manually chosen can offer *payouts of up to about 900 %, depending on how far the selected strike price is from the current market toll. The farther the strike price is from the electric current market price, the higher the potential payout is for a trade made in the direction of the strike price.

The expiration fourth dimension also plays an important office in calculating payout percentages. A strike toll that is far enough abroad from the electric current market place price to make a 567% *payout possible on a trade with a i-minute expiration will in most cases not be far enough for the same payout on a fifteen-minute merchandise. This is considering in that location is a amend chance for the price to reach a far-out strike price if in that location is more time left until expiration.

Payouts on Trades Placed in the ‘Current Price Style’

In this mode, the payouts are the same for both trade directions. As mentioned earlier, this type of trading is basically the aforementioned every bit trading binary options. *Payouts in this mode can be more xc% in some cases but it is common to see *payouts of virtually 87%.

Payouts on Trades Placed at the Nearest Strike Price (Auto-Selected)

In this mode, in many cases, the payouts for trades in either direction are pretty close to each other or the same. This is especially true when the strike cost closely follows the current marketplace price. Here is an example of where the strike cost and current market price are shut to each other:

As you tin can come across, the payouts for both trade directions (higher/lower) are near the aforementioned. When the strike price and electric current market price diverge to a moderate degree, a more than notable divergence between the payouts for contrary trade directions will appear. For example, if the *payout for ‘higher’ is 130%, the *payout for ‘lower’ could be 38% (derived from a real quote on the NZD/USD OTC digital option instrument, with a strike price at 0.652470 and a marketplace toll at 0.652454).

*Payout percentages utilise to successful trades only.

Who Can Trade Digital Options?

Digital options are simply bachelor to professional traders from the European Union and non-regulated traders from exterior the European Union. Retail EU traders practice not have access to digital options.

Apps and Platforms For Trading Digital Options

Digital options can be traded with any of IQ Choice’due south mobile apps:

• Apple tree/iOS mobile app
• Play Shop mobile app (Android)
• APK mobile App (Android)
• PWA (Progressive Web App)

Digital options tin besides be traded with whatever of IQ Choice’due south desktop and web platforms.

How to Place Your First Digital Choice Merchandise – A Beginner’s Guide

For beginners, the easiest way to start trading digital options is to apply the ‘current cost mode’. This fashion is basically the same as trading binary options. Here is a brief guide on how to get started with trading digital options with IQ Option:

Enable ‘Current Toll Manner’

First of all, you demand to activate the ‘current price manner’ on your trading platform. After you’ve opened a price chart of the digital option instrument y’all want to merchandise, click on ‘Time’ in the top-right of your trading platform and then click on ‘Enable Current Price Style’:

To make sure you’re in the ‘electric current price mode’, check that there is simply one payout charge per unit for both ‘college’ and ‘lower’. Here is an example of what it should await like:

Select the Expiration Time, Investment Corporeality, and Choose ‘College’ or ‘Lower’

Afterwards you take enabled the ‘current price mode’ you can proceed with your analysis and place some trades. At the top-right of your chart, select your expiration time. Just below this, you tin can enter the amount you want to invest in the trade. Finally, after you lot have washed your analysis, you can simply click ‘Higher’ or ‘Lower’ to open your trade. These 3 actions are indicated with arrows in the following epitome:

It is recommended to commencement place enough trades on your practice account to get a feel of the different elements of a digital options trade. Things to have note of are the payout percentage, purchase fourth dimension (white dotted line), expiration time (cherry-red line), etc.

When you accept placed a trade with a specific expiration fourth dimension, you tin can place additional trades with the aforementioned expiration fourth dimension until the purchase time runs out. Later on this, you will have to click ‘New Choice’ to place trades that will have a new expiration fourth dimension.

IQ Option Trading Platform Features

IQ Choice’south trading platforms are some of the best in the world and offer a corking variety of financial instruments. Non just can you trade digital options and binary options, only besides forex pairs, commodities, cryptocurrencies, stock indices, stocks and ETFs.

Let’s take a look at some of the features that make IQ Option a leader in the earth of online trading.

Charts, Technical Indicators, and Other Trading Tools

Charts

IQ Option’s trading platforms support 4 different types of charts:

• Candlestick charts
• Line charts
• Bar charts
• Heikin-Ashi charts

Candlestick charts, bar charts, and Heikin-Ashi charts have unlike candle time periods available – from 5 seconds up to 1 month.

Technical Indicators and Graphical Tools

IQ Option has an excellent range of no less than *99 technical indicators. These indicators are divided into the post-obit groups:

• Momentum Indicators: 32
• Trend Indicators: 23
• Volatility Indicators: 13
• Moving Averages Indicators: 7
• Book Indicators: 4
• Other Indicators: 20

*The number of indicators can alter at any time.

To access the different technical indicators, click on the indicators button in the lesser-left corner of your screen. Traders can also describe dissimilar types of lines on their charts past clicking the ‘Graphical Tools’ button straight in a higher place the ‘Indicators’ button.

Widgets

The following widgets can be activated on different groups of instruments:

• Traders’ Sentiment
• High and Low Values
• Other Traders’ Deals
• News
• Volume

IQ OPTION’S WIDGETS.

These widgets tin be really handy to go along runway of news events, market sentiment, price activity extremes, and trading volume. Yous can also come across where other traders have bought or sold the asset yous’re looking at.

Widgets can be accessed in the same tab where the technical indicators are situated.

Price Alerts

You lot can create price alerts on whatever of IQ Options fiscal instruments. With digital and binary options, this tin can be done with a single click on the warning button on the right side of the chart, where the price scale is situated. With all other instruments, two clicks will do the job.

Market place Analysis

The market analysis department can exist accessed from the vertical taskbar which is on the left side of the trading platform. When yous click on ‘Market Analysis’, a tab is opened with these 4 sections:

• News
• Forex Calendar
• Earnings Agenda

Each of these sections is populated with relevant calendar events or market news. The news section contains market information and news affecting different market sectors and asset classes.

IQ Option’southward Regulation / Licence

IQ Choice Ltd. is registered at St. Vincent and the Grenadines and this entity is not regulated.

Costless Demo Trading Account

IQ Option’s demo trading business relationship is an incredible tool with which traders can practice their trading without any risk to their capital. This practice account allows traders to acquaint themselves with IQ Options trading platform, instruments, and trading conditions earlier trading alive with real coin. The demo trading account has all the features and instruments of a live trading account. Traders tin also switch betwixt their live and demo accounts with only a few clicks, which is really convenient.

Trading Tournaments

Traders from non-EEA Countries tin can partake in IQ Pick’s trading tournaments. To enter these tournaments, click on the ‘More’ button at the bottom of the vertical taskbar which is on the left side of the trading platform.

A TRADING TOURNAMENT WITH A PRIZE POOL OF $fifty,000 AND AN ENTRY FEE OF $twenty.

Customer Support

IQ Option’southward support team is on standby to assist clients 24 hours a day, 7 days a week, via live chat, telephone, or email. To access customer support (live chat), click on the red ‘SUPPORT’ button at the bottom-left of your trading platform. You can also phone the number right side by side to this push.

Awards

During the years, IQ Choice has received numerous awards for its outstanding trading apps, its efficiency, its commitment to quality and excellence, customer satisfaction, and other attributes.

Conclusion

Digital options are an interesting alternative to binary options. Clients who trade digital options tin approach the market in a few dissimilar means and modify the probabilities and risk to reward ratios of their trade setups.

A really good characteristic of digital options is that you lot can also trade it in the ‘Current Price Manner’, which gives you a very similar feel to trading binary options. An attractive feature of trading digital options in this mode is that the payouts are college than on the corresponding binary option instruments, although there is a slight difference in trade outcome probabilities between binary options and ‘current price’ digital options.

While binary options are not available on IQ Option’s iOS app and the Play Store Android app, digital options can be traded on both of these apps. This makes digital options more than attainable to non-regulated traders than binary options.

Note:
Your uppercase is at risk