You will find trading based on candle colors one of the easiest strategies. This is a low-risk strategy. The main objective of yours is to identify a real candle and according to its colors placing your trades.
Large bodied candles indicate the strong price momentum in a specific direction. Take an example, a large green candle shows a strong uptrend, so to make a winning position place a buy position after the green candle closes.
In this article, you will see trading 5-minute interval candles for the EUR/USD currency pair. Also, the use of the Martingale money management strategy to ensure that each trading session ends up profitable.
Guidelines for trading candle colors on IQ Option
If you do not have much knowledge about the Martingale system and Martingale Strategy if it is Suitable for Money Management in Options Trading? will get you started.
Keep reading to learn more about trading candles on IQ Option. This is an Ultimate Guide for Trading Candles on IQ Option
Here are some rules to follow when trading.
Once the real candle is identified, wait until its close. Then enter a trading position based on the candle color. For example, if the candle is bearish, wait until the candle closes. Now, immediately enter a 5-minute sell position so that the next candle will close lower.
But, what if the trade loses? As soon as the candle will close, enter the same position at the open of the next candle. Keep doing this until a similar colored candle appears.
It is important to observe the alternation between green and orange candles. If your buy position ends up in the profit then wait until an orange candle develops. Enter the sell position.
Take a look at the chart below.
How the trades went
There was a range in the market and no apparent candle was developing. However, a solid bullish candle started developing and at its close enter a 5 minute “higher” position to make the trade into profit.
If the second trade didn’t go as expected. Rather than a trend reversal, first bearish candle signaled price consolidation. The first 5 minutes “lower” trade wasn’t profitable. So, in this case, to make a trade in profit. immediately enter a “lower” position at the open of the next candle.
After the bearish candle appears, at its close, enter a 5-minute “higher” position which results in a losing position. So, now at this point entered a similar “higher” position at the open of the next candle. This trade ended up profitable.
The candles to avoid when trading using this strategy on IQ Option
As mentioned earlier, candles to look out for should be true candles. These candles are large-bodied and no wicks or small wicks. The candles that should be avoided are special candles. These have small or no apparent bodies as well as long wicks. Some of these are included in the image below.
You will find all the entry points at the open of the next candle and the trade should last 5-minutes.
With the help of the Martingale money management strategy, the total trades are 5 where 2 are in losses and 3 are in profit.
Trading candles alongside the Martingale system is effective but has little returns
Since the trade did was 5 times, the cost was $121 and the second and fourth trade were unprofitable which means the loss was of $44 and the cumulative profit for the three trades was $36.42.
This means that even though I made a profit, it was quite small compared to the total amount invested.
Trading with color candle alongside the Martingale system is a simple and low-risk trading strategy and this low-risk trading strategy comes with low profits as you have seen.
Now that you’ve learned how this strategy works, try it out today in your IQ Option practice account.Good luck!
Top 5 Trending
The Exponential Moving Average (EMA) is a moving average indicator. Moving Average indicators are trend-following indicators which smooth out price… [Read More]
The Three White Soldiers is a candlestick pattern that signals a strong uptrend reversal. This pattern usually forms at the… [Read More]
Are you an account on IQ Option? Have you forgotten your password to log into your account? Then here is… [Read More]