3 Common IQ Option Pitfalls to Avoid
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Online investing comes with a series of common pitfalls. To maximize your profits and your enjoyment of the online investing experience, here are three specific ones to avoid.
#1) Understand Liquidity and Timing
Cash is cash, right?
Well. Yes and no.
Cash on hand may be very different from dollars in a savings account, in a money market account, or in a brokerage account. The way they all differ? Liquidity.
Sometimes the value of a trade can come down to minutes or even seconds, depending on your strategy. Before you engage in any trading activity, make sure you are very familiar with the ways you can get access to your funds, as processing times can impact delivery.
Many trades can be carried out with the understanding that funds will be settled later, but some investments have to be covered by a liquid balance or have trading fees which must be paid up front.
Most of the time, payment won’t be an issue, but know your cash timeline or you’ll find out at the exact moment that it both matters, and is too late.
#2) Know the Market Before You Buy
“Buy low” isn’t the only factor to keep in mind when evaluating uncommon or unique investment opportunities.
For example, when you’re ready to sell, will there be a market for the investment?
Even if your investment doubles or triples in value, if there isn’t a market for it, you won’t be able to make a profit. Securities exchanges guarantee a market for the investments they list, but when you are trading on more open markets like IQ Option you have no such protections. IQ Option gives you more freedom at the expense of requiring you to be a little more savvy about what you do.
Fortunately, IQ Broker lets you invest in many tried and true opportunities like gold, or in hot, tried-and-true stocks like Amazon, Coca Cola, or Tesla.
#3) Relying On the News
By the time an investment-impact item hits the news, it’s almost always too late to react.
Many new investors learn this the hard way. Many investors who think of themselves as well-informed and generally up-to-date on market trends rapidly discover they can’t predict markets enough to react to them.
Going in, they feel they have enough of a command of the news of the day and information sources to interpret them, but the news reports on the markets…not the other way around.
By the time someone is in the news, it’s because the markets have already reacted to it.
Reacting after-the-fact inevitably results in being taken advantage of, compounding losses. Many new investors take these actions anyway, half-aware they’re ill-advised, out of a desperate need to do something. Often, they do this under the auspices of “stopping the bleeding.”
In truth? If you miss your chance to act before news breaks, you typically shouldn’t act at all. It’s important to distance yourself from emotional reactions.
Not sure you’ve overcome these pitfalls yet? Open a free demo account with IQ Broker. You can begin to develop your investment strategy “on paper” before you start risking real money, and can find out what works and what doesn’t before you start risking real money on direct investing.