Trading NADEX Knock-Outs

[expiated]

Though both of the trades mentioned in Post #29 resulted in positive outcomes within the limited spans of time they were intended to take place, neither of them predicted with 100% accuracy the direction price would take soon thereafter. For example, I had no idea that USDCAD would begin to head north an hour and forty-five minutes later, climbing a surprising 17 pips away from the course that seemed most logical/rational...

And yet, both of these trades, along with the successful trade mentioned in Post #30, appear to confirm that whatever else price might do, it will ultimately find itself being dictated to by the slopes of similarly aligned 1⅔- and four-hour baselines, if and when both of these measures are angled in the same direction.

 

[expiated]

Wednesday | April 20, 2020 | 7:10 AM PST

So, based on all of this, I just purchased an AUDUSD two-hour binary option put contract that is already halfway to expiry with a 0.7434 strike price for a $15.75 payout. It would have been safer to use the 0.7438 strike price for about a ten dollar payout, but I want to really put my theories to the test, not to mention how much more awful it seems to risk almost a hundred bucks just to make a mere ten!

I did this, even though the four-hour trend is still bullish, because the intraday short-term reversals moving average (i.e., the 13- to 15-minute baseline) turned south BELOW the all-important 1⅔-hour baseline (which is still bullish) AND the 45-minute price range envelope is bearish now, both of which suggest this southward push might very well last for a whole hour.

UPDATE: At 7:17, the short-term reversal moving average is headed north again. So, the question is: Is the bearish 45-minute price range enough to save this trade, to disallow price from finding itself too high at the time of expiry? Or is it ALWAYS foolish to enter a short position when both the 4- and 1⅔-hour baselines are still bullish?

At 7:21 price is climbing so high that it is bordering on pulling the 45-minute price range envelope north with it. So then, it would seem that the latter is true: It is ALWAYS foolish to enter a short position when both the 4- and 1⅔-hour baselines are still bullish!

 

[expiated]

AUDJPY saw its overall trend transition from bullish to bearish about five hours ago. This should make it a GREAT pair to short (i.e., purchase Nadex Knock-outs) following pullbacks over at least the next 24 hours!

The same is true of EURJPY.

 

[expiated]

I would like to have more of a definitive means of forecasting when a turn really is going to follow through or not.

I will be testing whether the theory that a reversal is likely to follow through if the short-term moving average's lower panel histogram is greater than 0.066 or less than -0.066. In the case of AUDUSD, it WAS, but only for one 15-minute candlestick. Still, that means this criteria has just come up against a false positive/head fake!

At 0.7451, AUDUSD is now testing/pushing the last, most extreme band of the 45-minute price range envelope. So, I'll take a look at AUDJPY to see if it is doing the same. If it is, this might be an ideal moment to purchase an AUDJPY bearish knock-out.

Wednesday | April 20, 2022 | 7:48 AM PST

I just purchased an AUDJPY bearish knock-out (the second one down) in my live account. I am not going to set a take-profit target. This trade has just about everything going for it that it possibly might, so I am going to be ambitious/aggressive in this instance and go for broke...

 

[expiated]

Based on the fact that at this point, the pair is hardly moving, along with the breadth of its 45-minute price range, I have now set a take-profit target of nine pips for my AUDJPY position.

 

[expiated]

At 0.7451, AUDUSD is now testing/pushing the last, most extreme band of the 45-minute price range envelope.

Since testing/pushing the last, most extreme band of its 45-minute price range envelope at 0.7451(maxing out at 0.7457), AUDUSD has come down about eight pips to 0.7443...

MILESTONE

Wednesday | August 20, 2022 | 12:00 Noon PST

This was my first live trade applying the new (final?) "Middle Knock-outs Bias Overlap" methodology to employing the Numerical Price Prediction Forex trading system...

 

[expiated]

I am not going to set a take-profit target. This trade has just about everything going for it that it possibly might.

Actually, there was one aspect which was not favorable, and this is that the 45-minute price range envelope was slightly bullish at the time of entry.

 

[expiated]

Yesterday, when USDCAD's hourly trend line dropped below the four-hour baseline, I wrote that this is usually followed by a significant leg in the new direction, and indeed, USDCAD fell more than 100 pips. However, AUDJPY's hourly trend line also dropped below its four-hour baseline (earlier today) but the pair has already reversed north again. So, it's a good thing I cashed in with 10 pips profit because perhaps about 13 pips was the maximum the asset offered before turning around and climbing to the upper knock-out/stop loss.

I'm going to take a look at the weekly and monthly charts now to see if they are any help in explaining why everything might have unfolded the way it did. (On second thought, I don't think that is going to be of any help. However, the latter pairs DAILY chart IS bullish, so let me see what relationships appear, if any, if I plot the daily trend on a 15-minute bias overlap chart.)

When it comes to USDCAD, the daily chart has been rather noncommittal since the beginning of the month. No... I don't think the daily charts really help to explain much either.

So, what does this say? Maybe it points out the wisdom of using the 4-hour baseline, the 1⅔-hour baseline, AND the 45-minute price range envelope in not only choosing the direction in which to trade in, but also where to set the most reasonable take-profit targets.

The 15-minute charts are more helpful than the daily. I've run out of time right now, but what I will do later is to use the 15-minute carts to evaluate the 8-hour and 16-hour trends, especially the former.

My first impression is that they will help to clarify why one pair might have followed through on a new direction for the four-hour trend, whereas another might not.

 

[expiated]

My first impression is that the eight- and sixteen-hour baselines will help to clarify why one pair might have followed through on a new direction for the four-hour trend, whereas another might not.

They do help. For example, AUDJPY bounced off the eight-hour baseline when it headed north again. But the fact of the matter is, there is simply too much lag in anything above the four-hour measure to maintain the kind of accuracy and precision required to trade with an 85% or better daily success rate at the intraday level. (I even tried the six-hour baseline.)

However, the one constant that did seem to emerge was that trading from the "pullback side" of the 45-minute price range envelope to its "surge side" was the most profitable strategy in both of the cases I have been looking at recently as well as in general with every other foreign currency pair.

 

[expiated]

I'm not planning to make any trades today. To my eyes, the Forex market is almost with any direction whatsoever this morning.

UPDATE: It looks like Greg Michalowski agrees with me...