B.A.T. Guerrilla Trading System

[expiated]

Tuesday | March 29, 2022 | 7:00 AM PST

My plan is to consider both the 16- and 32-hour moving averages when attempting to interpret the true direction in which price might ultimately be headed, and to enter positions following bounces of the six-hour temporal "landmarks" as opposed to the three-hour levels to increase the odds that price isn't going to immediately reverse itself and turn back the other way right after I purchase a contract.

In actual trading, I've done just the opposite. Purchasing two-hour binary option contracts profitably seems to me to depend more on drilling down to monitor the 45- and 20-minute baselines than it does anything else.

 

[expiated]

Tuesday | March 29, 2022 | 10:00 AM

This morning's activity confirms that the 42- to 45-minute baseline(s) constitute(s) the "secret sauce" of profitable intraday trading, it being the measure previously designated as such perhaps three to six months ago—with the 90-minute baseline suffering from a bit too much lag, and the 20- to 26-minute baselines evidencing susceptibility to frequent fluctuations that deviate from the overall general direction price is headed from an intraday perspective.

So then, the primary "multitude of counselors" guiding the decision-making process when it comes to entering and exiting intraday positions consists of the 45-, 20- and 8-minute baselines along with the 5-minute price flow envelope.

 

[expiated]

This morning's activity confirms that the 42- to 45-minute baseline(s) constitute(s) the "secret sauce" of profitable intraday trading, it being the measure previously designated as such perhaps three to six months ago—with the 90-minute baseline suffering from a bit too much lag, and the 20- to 26-minute baselines evidencing susceptibility to frequent fluctuations that deviate from the overall general direction price is headed from an intraday perspective.

Based on the above possible insight, I configured a simple corresponding 15-minute chart that I will be using to help identify four specific situations:

1. To be on guard for possible trend reversals when price reaches the 0.26% to 0.46% deviation levels in the 45-minute price range during periods when a given pair is not trending very strongly.
2. To be on guard for possible trend reversals when price reaches the 0.75% to 1.07% deviation levels in the 45-minute price range during periods when a given pair IS trending strongly.
   
3. To consider entering positions whenever a red candlestick forms in the midst of an upward sloping 15-minute baseline, especially when the 45-minute price flow is also bullish, and vice versa.
4. To be prepared to enter positions as soon as the 15-minute baseline reverses direction from a course opposite that of the slope of a clearly trending 45-minute price flow to resume a trajectory aligned with it.

 

[expiated]

Tuesday | March 29, 2022 | 6:05 PM PST

USDJPY has crawled below the 45-minute baseline to the 0.46% deviation level. So, be on the alert and prepared to purchase an in-the-money binary option call contract if and when you see signs of a reversal north in the form of an upward hook/hinge in the the eight-minute baseline (or if you wish to be more conservative, wait until you see the eight-minute baseline cross above the 20-minute measure before you act).

In fact, all the yen pairs on your watch list are displaying this same behavior, so check to see if one of them has a more overall bullish profile than the rest, and if so, consider trading that particular pair as opposed to any of the others.

UPDATE: I just merged my 15-minute chart with measures from a daily and an hourly chart to give me the 3½-hour and daily price ranges as well. This should assist the evaluation process when comparing one currency pair with another.

I ended up opting to buy a USDJPY contract. Unfortunately, neither of the two-hour contracts encompassed all of the relevant area, so I had to purchase a daily contract instead, and will therefore have to wait one-and-a-quarter hours to see if the pair follows through or if it is so bearish that it reverses direction again, forcing me to abandon this trade.

(So then, when it come to the "big picture," the ideal trades will be those made in the corresponding direction when the slopes of the daily, 3½-hour and 45-minute baselines are all similarly aligned.)

UPDATE: The yen pairs are failing to follow through, so I abandoned the position while I still had a $3.00 profit (or $1.00 after fees). Three of the pairs are in the lower region of the daily price range, so I will probably have another go at it if and when they turn north once again.

 

[expiated]

Having failed to consider buying a USDJPY put contract instead when the price of the pair resumed falling, I went ahead and purchased an EURUSD call option shortly before expiry in an attempt to realize some of the potential return that was lost when the initial situation went unfulfilled...

Thankfully, though the price did come down a bit during the intervening moments, the contract was still in-the-money at expiry.

I calculate USDJPY's extreme lower levels of both the daily and 3½-hour price ranges at approximately 120.95, so it will be interesting to me to see what happens if and when the pair drops down to this figure.

 

[expiated]

I will probably have another go at it if and when they turn north once again.

I ended up buying EURJPY. Hope it follows through this time around...

 

[expiated]

EURJPY did indeed remain in-the-money, and in fact, I have purchased another call contract this hour as well...

 

[expiated]

Wednesday | March 30, 2022 | 8:10 AM PST

EUREKA!​

A simple plan for a simple man!

This is so sweet! Price almost never violates this particular price range at these levels during ranging and trending markets, as pictured. So then, I simply wait until assets approach expiry and check to see which ones are nearest the constraining limits. I select those that are closest, or are closest and pulling back, and purchase the corresponding contract(s), setting the relative strike prices accordingly. Should price make contact with a given boundary and NOT pull back, I know to abandon the trade immediately given that the pair is not behaving in typical fashion.

 

[expiated]

The above strategy looks to be an almost foolproof plan, leaving little else to explore. So, instead of using it to continue trading binary options, during the next 24-hour market cycle, I think I'll try going to my demo account to see what happens if I apply it to Nadex Knock-Outs and how the payouts and risk-to-reward ratios compare between the two.

Given the simplicity of the strategy, the one thing I did do was code an indicator to alert me when possible trade opportunities might be setting up so I will no longer need to continuously monitor my charts. I can be doing other things and then simply refocus my attention on the relevant asset if and when I hear its signal go off.

 

[expiated]

After my initial evaluation, I would say that at this point it looks to me like Nadex Knock-Outs offer me a much better proposition than Binary Options, at least in terms of being able to arrange much more favorable risk-to-reward ratios.

In this case, I would be risking only $13 for a potential reward of $65, whereas a typical in-the-money binary option contract would provide me with an almost totally opposite scenario (i.e., risking $83 for a potential reward of a mere $17). Of course, the drawback is that when it comes to Knock-Outs I can be stopped out of the position, whereas with Binary Options, it is impossible for this happen, so if the market turns back in my favor, I could still end up with a payout, even AFTER my trade had been out-of-the-money for a given period of time.

But then, this is essentially irrelevant, given that if price does not behave as I anticipate when trading binary options, I almost immediately kick myself out of the position anyway, so it is basically the exact same thing as having the platform stop me out automatically.

Also, as with Binary Options, Knock-Outs allow me to set a profit target, so that if I should choose to use this feature, I won't even have to monitor the trade given that my potential loss will be limited and I won't have to worry about abandoning the position manually should the potential loss become too great, as I have to do with binary options.

In this case, I set my profit target at seven bucks, which was hit in just a few minutes (no need to wait until the end of the hour).

Obviously, a $7 gain as opposed to a $13 loss is less than a one-to-one risk-to-reward ratio (the minimum that is considered acceptable if one wishes to call himself or herself a professional trader). Nonetheless, it is much better than the $13 gain versus $87 loss that might result from purchasing an in-the-money binary option contract.

So then, it appears that the only possible drawback when it comes to Knock-Outs is if the market doesn't move so that the resulting payouts are nowhere near comparable to those offered by binary options. However, given the strategy I will be using, I will, in effect, only be trading when there is a relatively significant degree of market volatility and liquidity.

Moreover, given that in-the-money binary option contracts typically offer me only $7 to $20 worth of profit at the most, and at much greater risk, it seems to me that this potential drawback is pretty much moot.

Consequently, going forward, I think I'm likely to switch from trading Nadex Binary Options to trading Nadex Knock-Outs.