Your capital may be at risk. This material is not investment advice.
South African Traders are used to doing technical analysis or at least using the related reliable information presented by IQ Option. In this analysis, market sympathy and market forces are somehow eliminated as a trader looks to decide on where and what to trade. A trader in South Africa is said to be trading in a neutral market strategy. Pair options trading is one of the finest strategies that helps traders to achieve the neutral market strategy. Pair option trading allows a trader to get returns in both down and up markets without necessarily having to commit a significant amount of investment or capital.
The strategy best fits traders in South Africa who have some special bias towards a given stock while remaining nervous about the shakeups in the market. Such traders are hesitant to risk a given amount of capital, and they want to remain on the periphery as far as the bet is concerned. With IQ option, South African traders are guaranteed of some return or minimal losses since there is an expert market analysis that is provided to them.
Significance of Correlation in Pair Option Trading
The pairs involved in pair option trading are analysed and a correlation of the pairs is availed to traders. IQ Option gives this as a percentage. An ideal market environment gives a 100% correlation. In reality, a trader will never see such an occurrence since a perfect market never exists. 100% correlation insinuates that an upward trend in the price of a given stock makes the other stock to move in a similar manner.
The other extreme end of the spectrum is that the stocks can never have a correlation; at this time the correlation is 0%. Such an instance occurs when the stocks move in the opposite direction to the market all the time.
Correlation is significant in picking the option that a South African trader will trade on since it helps to predict the nature of the market and monitoring the factors that make the market behave in a certain way. If a trader in South Africa sees that two assets that historically correlate with each other, are now starting to deviate from each other, then this is the crucial time to trade.
The neutral market strategy, as outlined by IQ Option, seeks to help traders reap maximum benefits from the correlation analysis. Once an investor realises a break in the normal movement of two assets that have a high correlation, it is of the essence to have a put option on one asset and to place a call option on the corresponding asset simultaneously.
It is not possible to fail in both the parts of the pair. But there are high chances of getting high returns on either of them. A unique benefit of pair option trading is that a trader rarely loses regardless of the market direction. IQ Option allows traders to access the stocks that have a reliable correlation between them. Moreover, the traders are led through an in-depth discussion and analysis before deciding where to place their trade for maximum benefits. With IQ options, traders in do not just trade. They trade with a high degree of confidence that they will realise a handsome profit.
Please be advised that certain products and/or multiplier levels may not be available for traders from EEA countries due to legal restrictions