Trading NADEX Knock-Outs

[expiated]

Wednesday | April 6, 2022| 2:35 PM PST

I replenished my demo account with $10,000, and with the trades from the end of last week and the beginning of this one, I'm currently up almost 500 bucks.

I replenished my NADEX demo account some time around February 10th of this year, and seeming to have unlocked at least one approach to getting around the platform's ridiculously calibrated risk-to-reward structure to trade binary options profitably, I turned my attention to the outfit’s Knock-Outs, which offer a much better situation in terms of being able to take advantage of greatly improved risk-to-reward ratios. (The amount in my demo account is currently at $18,461, so I should be able to double the figure to an even $20,000 within just two months.)

But the problem is, maximizing the profitability of this approach using Numerical Price Prediction currently requires me to monitor my positions on a continuous basis, which I would rather avoid, if possible.

So then, the purpose of this journal is to begin investigation the possibilities in this area.

 

[expiated]

Because the Knock-outs are good for the entire week , it made sense to me to go back to my weekly charts. I soon discovered the great amount of lag in the weekly trend line when one drops down to lower time frames. It reminded by that weekly price flow is conveyed by the four-day baseline, and NOT by the weekly measure.

I will therefore me trading these instruments in the same direction as the trajectory of the four-hour trend line; but only it they also match the (rough) slopes of the 24-hour and 36-hour baselines; but only as the slope of the four-hour baseline is reversing direction to realign itself with the slopes of the other slower measures.

It seems this should result in successful trades over a period of days, even with the frequent fluctuations that occur in the 20-minute (and 45-minute?) baseline(s).

Time will tell…

(P.S. Something else to watch out for that might help to highlight potential/promising entry and exit points are extreme levels in the five-hour price range envelope. I have also plotted an envelope based on the ten-hour baseline as an additional visual aid suggesting the gist of intraday price flow.)

 

[expiated]

Since Knock-offs keep going all week long, the platform just adds and subtracts from the top and the bottom as necessary. For example, a couple of days ago AUDUSD started with .7612 and ended with .7732. Now, it starts with .7492 and ends with .7532.

I'm waiting for five days for either EURJPY's shorter trends to turn north or its longer trends to turn south.

I'm waiting to buy AUDJPY, AUDUSD, GBPJPY and/or USDJPY.

I'm waiting to sell USDCAD and/or USDCHF.

 

[expiated]

Knock-Outs...offer a much better situation in terms of being able to take advantage of greatly improved risk-to-reward ratios.

But of course, when the market is stalled like this, you could "make a killing" buying in-the-money binary option contracts, but get virtually nowhere trading knock-outs...

 

[expiated]

Thursday | April 7, 2022 | 4:15 PM PST

I'm waiting to buy AUDJPY, AUDUSD, GBPJPY and/or USDJPY.

AUDJPY has crossed into the bullish region, but for this signal to remain valid, the pair has to avoid dropping back down below to the 92.71 level.

 

[expiated]

Friday | April 8, 2022 | 3:00 AM PST

The amount in my demo account is currently at $18,461, so I should be able to double the figure to an even $20,000 within just two months.

I was knocked out of the AUDJPY position in my live account, so that plan didn't work. On the other hand, the binary option trade I made in my demo account was successful, so I am now $410.75 closer to doubling the initial $10,000 virtual balance from around February 10, 2022.

If I call the area between the moving average bands that's colored yellow in selected spots, at first it looked to me like this could be used as validation of bona fide trends (seeing as how price kept rising at the beginning and and of the time interval displayed in the chart) when candlesticks are trading above it or within it (as it was [more-or-less] in the center of the chart).

Except that it reached this area where the red arrows are drawn, but still pulled all the way back up to the far side of the red envelope, which also would have knocked me out (see the spot circled in black).

Okay then, what if I did just the opposite and only entered positions when candlesticks paint to the far side of these envelopes?

This seems to show some promise, so I'll code an indicator to alert me whenever a currency pair is experiencing these conditions and use it to bring my attention to these kinds of possible trade opportunities next.

 

[expiated]

I'm waiting to buy AUDJPY, AUDUSD, GBPJPY and/or USDJPY.

At the time I bought AUDJPY yesterday, I was considering buying USDJPY. Had I done so, it would have been a profitable trade, but it would have also given me a false sense of using an approach that would probably be profitable virtually all of the time.

 

[expiated]

Okay then, what if I did just the opposite and only entered positions when candlesticks paint to the far side of these envelopes?

Before and after...

The second chart is derived from a configuration that had all proprietary indicators. I think it is cleaner and focuses more on just the most important readings.

 

[expiated]

Saturday | April 9, 2022 | 1230 PM PST

A helpful practice to get the "gist" of intraday price flow at a quick glace is to shade or pattern the upper and lower halves of the six-hour price range channel differently.

Several months ago I was debating whether the six- or the eight-hour baseline was a better representative of the general overall intraday price flow.

I concluded that the eight-hour measure evidenced greater validity and was more reliable, but the six-hour baseline was more responsive to changes that might constitute shorter-term opportunities.

Yet, given the present state of affairs, which appears to be confirming that the six-hour baseline does indeed fluctuate perhaps a bit too frequently in that it has seen an approximately 19-hour price range envelope emerge as a new, possibly critical element (along with the approximately nine-hour price range channel that got the ball rolling this week) I'm sure I need to adjust my protocol.

If I make this a new rule: Never buy from the bottom half of the 19-hour price range envelope and never sell from its top half; then I avoid the two losing AUDJPY and AUDUSD Knock-outs from last week.

Potential Rule #2: Buy or sell as you get a reversal in the "Instantaneous Moving Average" on a one-hour chart.

Potential Rule #3: You have even more justification for making the trade if candlesticks are crossing the three-hour baseline as the instantaneous moving average executes the above reversal. (It sort of validates or confirms the trade.)

Potential Rule #4: There is an even greater degree of confirmation if, when the instantaneous moving average is reversing direction and candlesticks are crossing over the thee-hour baseline, they are doing so in the area at or beyond the "far side" of the 4-hour price range (and especially if it is occurring at the "far side" of the 9½-hour price range too).

Potential Rule #5: All three envelopes sloping in the same direction that price is headed overall constitutes ultimate validation for having made the trade.

Let me see if I can use these guidelines to double the $10,000 I started with in my demo account on approximately February 10, 2022 to a cool $20,000 by the middle of next week—a 100% return within about two months.

 

[expiated]

Sunday | April 10, 2022 | 2:00 PM PST

My plan for this week is, when I see that the 9½- and 19-minute baselines belonging to a given currency pair are both trending strongly to the upside or downside, to simultaneously purchase in my demo account all four knock-outs at a random time, without regard to any kind of logical entry strategy, and then watch and record how each of the four trades unfolds. This will be in an effort to determine whether (and where) the location of the floor and ceiling leads to a greater probability of particular trades resulting in profitable outcomes over an eventually large sample size.

I intend to resume trading my live account on April 20, 2022. However, my trades will not be timed randomly then, but rather, they will be entered in accordance with the protocol described in Post #9.