Beta Testing the New Nadex Trading Platform

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Where is the rate going here? It's up, down, and all over the place!

The five-hour price range envelope at 0.50% deviation (see image below) suggests that generally speaking, overall, the rate is headed north. So then, is the 2½-hour baseline even relevant here? It looks like the best time to have purchased binary options would have been to buy call contracts when the rate was in the lower region of the price range as the 30-, 45- and/or 70-minute measures were reversing north.

Measures like five hours are too slow to measure intraday trends, so you want to use them to establish swaths of possible values and then refer to the resulting belts to help you structure your trades.

 

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So then, is the 2½-hour baseline even relevant here?

It is if you follow the protocol. You would simply have to add agreement with the five-hour baseline into the mix. As for buying call contracts when the rate was in the lower region of the price range as the 30-, 45- and/or 70-minute measures were reversing north... those are not the positions you would be entering. You would have to come up with a separate, whole new protocol for that.

For example, look at this...

The five-hour price range envelope suggested that structurally, it might have made sense to go long as the 30- and/or 45-minute measures turned north, but those were all head fakes! Again, the 70-minute measure is the minimum baseline with sufficient validity to signal intraday reversals that might justify purchasing two-hour binary option contracts, with the 1.83- and 2.5-hour baselines confirming reversals, but only after a period of lag.

 

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Regardless of whether the five-hour trend is bullish or bearish, if price action is taking place in the lower half of the channel, the intraday sentiment is bearish. If it is taking place in the upper half of the channel, the intraday bias is bullish.

One would think that the ideal situation would be for price action to be taking place in the upper half of the five-hour price range when the five-hour price flow is bearish, and vice versa. Then a trader could wait for the 70-minute baseline to reverse direction and enter a position almost guaranteed to have a positive outcome

Example #1

Example #2

 

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Regardless of whether the five-hour trend is bullish or bearish, if price action is taking place in the lower half of the channel, the intraday sentiment is bearish. If it is taking place in the upper half of the channel, the intraday bias is bullish.

The above examples illustrate that this statement is NOT true, because when rates are exiting the lower half of the five-hour price range, the are bullish, and when the are exiting the top half of the five-hour price range, they are bearish.

 

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Need Some Good Advice?​

Because of the amount of lag evidenced by the 70-minute and 2½-hour baselines when it comes to recognizing reversals in the intraday trend AND because the faster moving averages cannot be trusted AND because there appears to be no shortage of pullbacks in the 70-minute price flow, I recommend to myself that I trade intraday pullbacks exclusively and not even try to trade intraday reversals.

Also, because the 2½-hour baseline almost always dictates that the 70-minute baseline eventually come in line with it when the two are at odds, it would probably make sense to NOT trade pullbacks in the 70-minute price flow until and unless these two moving averages are already in sync.

 

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I recommend to myself that I trade intraday pullbacks exclusively and not even try to trade intraday reversals.

Drilling down to the one-minute level, the (thistle colored) thirty-minute baseline looks like it is the measure that I should use as the arbiter of intraday pullback entries and exits.

 

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Drilling down to the one-minute level, the (thistle colored) thirty-minute baseline looks like it is the measure that I should use as the arbiter of intraday pullback entries and exits.

Sunday, May 29, 2022

The 70-minute baseline took over as the main consideration when trading NADEX knock-outs, because it was much more stable than the former indicator assigned that role—namely, the 45-minute baseline.

But as it turns out, the 70-minute measure is not stable enough. It will sometimes suggest an intraday trend reversal that never manifest due to the 2½- and five-hour price flows maintaining their present course without interruption.

So then, the role of conveying the gist of the general overall direction in which rates are headed at the intraday level has been handed off from the 70-minute measure (which also proved to be too prone, sensitive, or susceptible to less significant or durable price fluctuations, similar to the 45-minute measure) to the 2.5-hours and 1.83-hour measures.

So essentially, I am not looking for pullbacks in the 70-minute price flow, but rather, in the two- to two-and-a-half hour price flow.

Consequently, I had better know how to tell the difference between when I am witnessing a temporary pullback and when I am observing a fully-fledged reversal…

For one thing, a pullback is confirmed when the 30 minute baseline is rejected by statistical support or resistance in the form of the 70-minute price range at about 0.20% deviation and/or the 2½-hour price range at about 0.30% deviation.

If the 30-minute baseline elects not to maneuver a hook somewhere near these levels, the pair is almost certainly in the midst of a fully-fledged reversal rather than simply executing a temporary pullback.

And another possiblemove confirming a reversal in the intraday trendis if the primary area in which price action is taking place switches from one half of the 2½- and/or 5-hour price range envelope to the other.

Classic Pullback:

First of all, the five-hour, two-and-a-half hour, one-hour-and-fifty-minutes, and 70-minute baselines (blue, red, green and brown respectively) are all bullish.

Also, the orange and turquoise (short-term) trend lines (four, six, and eight-and-a-half minutes) are rejected by statistical support in the form of the lower band of the 70-minute price range envelope at 0.20% deviation (inside the black circle). This is also where the two-hour and the 40-minute temporal support levels are finally able to hold out against the push south.

When the thistle-colored baseline (30-minutes) turns north (see the black dot), it confirms a bullish sentiment and gives the go ahead to purchase an in-the-money two-hour binary option call contract that is into its second hour before expiry.

This decision is supported by the fact that candlesticks have crossed above the purple and blue (intermediate) trend lines (eleven to fifteen minutes), as well as the thistle (30-minute) trend line; not to mention that this is where one begins to see separation between the lower bands of the Donchian channels (temporal support).

 

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Note that in the example pictured below, the five-hour, two-and-a-half hour, one-hour-and-fifty-minutes, and 70-minute baselines (blue, red, green and brown respectively) all start out bearish, (see inside the black box).

However, there is never any separation between the two-hour and the forty-minute temporal resistance levels, and the orange and turquoise (short-term) trend lines (four, six, and eight-and-a-half minutes) repeatedly crash against statistical resistance in the form of the upper band of the 70-minute price range envelope at 0.20% deviation, forcing it to turn north, AND pushing the temporal resistance levels upward step-wise as well.

Given that the thistle-colored baseline (30-minutes) never turns south, it never confirms a bullish sentiment or gives the go ahead to purchase an in-the-money two-hour binary option put contract into its second hour before expiry.

And finally, the (blue and purple) intermediate trend lines never cross below the thistle 30-minute baseline, with price action beginning to take place primarily above the center of the 2½-hour price range, and later, even above the middle of the five-hour price range, all of which begins to pull the 70-minute, one-hour-and-fifty-minutes, and two-and-a-half baselines north, suggesting a fully-fledged reversal upward.

 

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Tuesday | May 31, 2022 | 9:40 AM PST

For reasons I will spell out in subsequent posts, as of today, Friday, May 27, 2022, I will be looking to see how long it takes me to grow my Nadex demo account to $30,300 (if ever).

This trade should NOT be made. The 30-minute trend line has yet to reverse south, and the 2.5-hour baseline is trying to turn north. I am purchasing these 13 put contracts anyway, because overall this rate has been coming down since the start of the present 24-hour market cycle and because the New York session typically begins losing momentum at about this hour, but mainly because the .7200 strike price is ABOVE the top of the 2.5 hour price range (just barely) and even above the extreme limit of the 70-minute price range.

The since the 30-, 45-, and 70-minute measures are already bullish, and the 1.83- and 2.5-hour baselines look like they too are just now turning north, the CORRECT move to make is to WAIT for the 11-, eight-, and 4-minute trend lines to pullback, then subsequently form hooks to the north, at which point, it would make sense to "invest" heavily in the second half of whatever two-hour Nadex call contract is in play at the time.

Unfortunately, I don't have the luxury of waiting around.

 

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I had better know how to tell the difference between when I am witnessing a temporary pullback and when I am observing a fully-fledged reversal.

This price action from today confirms everything I just wrote on this topic the other day...