Trading NADEX Knock-Outs

[expiated]

When you were trading NADEX binary options, you said to never trade against the (red) 20-minute baseline. Well, it's time to extend that rule to two more measures, to be written in stone, even more so. Namely, never trade against the crimson and gold Battengerg 8½-minute trend line OR the green 11 to 12 minute trend line(s).

I thought I wrote somewhere that my charts were now more or less "written in stone," and indeed, I haven't really changed things, per se. But, I did add some stuff. My attempts to trade Forex pairs minute-by-minute has recommended greater precision than, up to this point, I thought was called for.

I'm now of a mind that I should never trade against the combined price action flow of the orange and maroon two-minute baselines, the blue four-minute baselines, and the crimson and gold Battengerg 8½-minute trend line; for it turns out that fluctuations associated with these faster measures actually have an impact/effect on the profits and losses potentially realized when trading Nadex Knock-outs.

 

[expiated]

I'm now of a mind that I should never trade against the combined price action flow of the orange and maroon two-minute baselines, the blue four-minute baselines, and the crimson and gold Battengerg 8½-minute trend line; for it turns out that fluctuations associated with these faster measures actually have an impact/effect on the profits and losses potentially realized when trading Nadex Knock-outs.

Keeping in mind these new thoughts and switching back to a binary option mindset, what am I to make of things?

In most spots, it looks like if the thistle 30-minute, red 20-minute and green 11- or 12-minute baselines are sloping in the same direction, a binary option contract purchased as the orange two-minute, black two-minute and blue four-minute baselines are coming out of their pullbacks by crossing over the orange and black Battenberg and the green 11- or 12-minute measures are almost guaranteed to have profitable outcomes. (Use the turquoise 6-minute baseline for confirmation?)

But, in the middle of the above image, this asset's thistle colored 30-minute baseline starts to "wobble."

Adding the fat, dashed indigo 70-minute baseline provides a more stable measure, but look at all that lag! The fat, dashed black 50-minute baseline seems to do the same job just as reliably, but with less lag.

However, in this next image, it is clear the rate is rising overall during the final two-thirds of the chart, and yet, this is not reflected in BOTH the 50- and 70-minute measures which, like the 30-minute baseline did up above, start to exhibit a certain amount of "wobble."

But the five-hour price range envelope previously used for tracking the day-to-day trend (see the longer-range chart below) does not seem to actually follow price closely enough to take over for the "wobbling" measures. No, it appears it would be better to use two-and-a-half hours (though a better color than lime probably needs to be selected). In fact, this is a measure that was previously in use.

So then, the general idea would be to purchase Nadex binary option contracts as rates are coming out of pullbacks to resume a course headed in the same direction as the slope of the two-and-a-half hour baseline.

The 30-minute baseline would either have to be in sync with the two-and-a-half hour measure, or it too would need to be reversing direction to rejoin the slower measure along the same trajectory.

 

[expiated]

Wednesday | June 15, 2022 | 6:35 AM PST

This is a live trade. It had a freaking 10-pip spread! Why do wide?

USDJPY had been climbing ever since May 30th, but stalled on Thursday, Friday and Monday. Hopefully the ascent isn't over yet, but today's candlestick is red so far, so we'll see.

 

[expiated]

USDJPY had been climbing ever since May 30th, but stalled on Thursday, Friday and Monday. Hopefully the ascent isn't over yet, but today's candlestick is red so far, so we'll see.

I was knocked out. Today is very slow. The pairs are just poking along. I'm long again, but on mixed messages. The four-hour trend line is bearish, yet the two-hour baseline looks like it is reversing to the north (but there is no guarantee that it will follow through). USDJPY looks like it just bounced off a higher low, with the 20-minute baseline reversing north again (hopefully, but it's not actually hooking north yet...it simply has the candlesticks forming above it), but the 30-, 40- and 50-minute baselines are still bearish. On the other hand, the 70-minute baseline has been bullish for some time now, and remains so.

I'm hoping this is the start of a new leg north and that I will receive the full $54 payout without being stopped out again.

 

[expiated]

AUDJPY is trending better than any other pair, so I'm hoping the pullback its in at the moment will turn around somewhere around 93.28 so I can enter a long position here as well.

UPDATE: As of 8:26 AM PST, I am also long AUDJPY.

UPDATE: USDJPY just turned south. It is acting STUPID! So, I have exited this position!!! I must conclude that the four-hour baseline rules, and that consequently, the two-hour baseline will resume sloping downward in the not-too-distant future.

If I could continue monitoring my charts for the rest of the day, I might have entered a short position now and then observed to make sure the pair followed through. But, given that this isn't possible, I will simply check back later to see what USDJPY actually did.

AUDJPY is up $7.00 now, but will it build on this, or will it turn around and stop me out?

 

[expiated]

If I could continue monitoring my charts for the rest of the day, I might have entered a short position now and then observed to make sure that USDJPY followed through. But, given that this isn't possible, I will simply check back later to see what USDJPY actually did.

Check this out!

It looks like a short position would have worked out nicely. However, price action continues to recommend always skipping the first knock-out, because the currency pairs simply swing much too widely to use stops that are that tight.

With respect to AUDJPY, I've decided not to pocket my gains, but to go ahead an wait to see if the knock-out reaches its ultimate target...

(I was knocked out the first time around, so I used the second level this time.)

 

[expiated]

Thursday | June 16, 2022 | 6:50 PM PST

It occurred to me a couple of days ago that if these are weekly knock-outs I'm trading, perhaps the way to maximize the odds of their targets being hit before their stops are is to enter positions at the highs and the lows of the week.

Practically speaking however, I'm not quite sure yet how one might go about doing that. But, this thought DID bring back to mind the importance I once assigned to the two-day price range envelop and the 48-hour temporal support/resistance channel as guideposts on my higher-time-frame charts.

I therefore once again configured an hourly setup with these two measures plotted on the "graph" along with the two-hour baseline. The idea was to enter positions as the baseline reversed direction near, at or beyond one or both of these "warning signs."

My first opportunity to try this out was hours and hours ago when AUDJPY and AUDUSD evidenced the appropriate structure. But, which pair was I to choose with my limited funds?

AUDJPY came through like a champ, sinking quickly over the next few hours, and no doubt, would have provided me with its full payout…

But unfortunately, I chose AUDUSD instead. And when I woke up this morning, it was already reclaiming some of the territory it had surrendered, so that I was only able to save $6.00 of my profit. It eventually climbed even higher than its original starting point. But, this once again meant that (as of a few hours ago) it again evidenced the desired structure for a short position...

This second time around, I did a little bit better. As you can see from the above image, when I got to the Cerritos Mall and logged onto the Internet, it was giving up ground once again. Nonetheless, this time I was able to save $11.00 worth of profit. (I had to clear a ridiculous 10-pip spread!) But theoretically, this pair "should" drop all the way down to around 0.6875. Consequently, I would be fully justified if I were to enter a third short position as soon as the 5-, 8½- (and 20-) minute baselines turn around and begin heading south again. Unfortunately, I probably won't be at a computer if and when this happens.

In any case, the best looking chart (on my watch list) right now is EURUSD...

 

[expiated]

It occurred to me a couple of days ago that if these are weekly knock-outs I'm trading, perhaps the way to maximize the odds of their targets being hit before their stops are is to enter positions at the highs and the lows of the week. Practically speaking however, I'm not quite sure yet how one might go about doing that.

Tomorrow I will begin using the weekly chart configuration pictured below to work backwards in coming up with a strategy for anticipating weekly tops and bottoms and possibly using these forecasts to confirm when it is "safe" to enter positions as price retreats from these upper and lower projected limits on weekly price action.

 

[expiated]

In any case, the best looking chart (on my watch list) right now is EURUSD.

Theoretically, the Euro-U.S. dollar should drop all the way down to the target. However, it is time to go to bed and I will be unable to monitor this position. So, I will go ahead and set my target profit for $14.00 and retire for the night with less potential gains, but greater actual peace of mind...

 

[expiated]

Checking on the progress of EURUSD after waking up three hours later... the pair has actually lost ground...

So, it looks like locking in my gains while I had the chance wasn't such a bad idea.