Trading NADEX Knock-Outs

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All I want to do here is record actions considered or taken to spot any weaknesses in my decision-making process, and to track exactly how much money is being made, or might potentially be made, trading NADEX Knock-Outs using New Phase tactics and strategies.

"New Perspective" Trading

This "New Perspective" configuration needs to be studied. As a starting point, let's say you are only going to trade in the direction of the 80-minute (and two-hour) price flow(s). This means there will be four options for when and where to enter positions:

1. The far side of the 80-minute baseline.
2. The far side of the six-minute price range envelope at 0.10% deviation.
3. The far side of the ten-minute dynamic adjustable ten-minute price range.
4. The far side of the two-hour temporal support/resistance level.

The best setups should be those instances in which the last three or all four of the above conditions converge (i.e., occur simultaneously). For your take-profit target, use the near side of the six-minute price range. Record exactly which combinations of the four conditions pop up together, along with when and where, as well as their final outcomes. Also record exceptions to the rule, such as when trading in the direction of the ten- and 20-minute baselines, but against the 80-minute price flow, would have resulted in profitable trades.

(Note: The 2-minute baseline has to cross over the six- [and ten-] minute baselines to trigger trade executions.)

 

[MacBookProHo]

"New Perspective" Trading

Are you still compounding every day in the market at an average rate of 1%-2% trying to become a multi-millionaire, and huge,
How did that adventure mission progress, keep rising to the Top

 

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Saturday | September 24, 2022

The Xs in the image above mark the potential entry levels during the last 24-hour market cycle from this week on the one-minute chart of a currency pair that could not exactly have been said to have been trending well. Since there were 8 such events, a conservative estimation for how many total trade opportunities might typically be offered on a given day among the ten pairs you follow would be 80. This should be plenty to find/identify a few profitable NADEX Knock-Out trades each day. A brief description of each example (including the ones that did not qualify) follows:

1. Convergence of all four requirements during a neutral market as defined by the 40-minute price flow
2. 24-hour temporal resistance above the 40-minute baseline during a bear market as defined by the 40-minute price flow
3. Same as above
4. Convergence of all four requirements during a bear market as defined by the 40-minute price flow
5. Same as above
6. Rebounding off the six-minute price range above the 40-minute baseline.
7. This X makes no sense. It should not be here.
8. Rebounding off the six-minute AND ten-minute price ranges above the 40-minute baseline.
9. Confluence of all four requirements during a bear market as defined by the 40-minute price flow
10. (Kind of bouncing off the six-minute price range AND the 40-minute baseline, so it does not fit any of the four described patterns.)
11. Same as above
12. This number is missing
13. Reversal based on the ten-minute baseline, so it does not fit any of the four patterns described above
14. Bouncing off 24-hour temporal resistance above the 40-minute baseline

NOTE: ALL of the qualifying scenarios in the above examples unfolded ABOVE the 20-minute baseline (except for Examples 10 and 13). So then, they all flatly BROKE the rule about never trading against the slope of the 20-minute baseline. This is an extremely important development to recognize. (The two exceptions are probably how unqualified setups got included. The bearish 20-minute baseline is probably what made them look like promising opportunities, even though they did not display any of the required conditions.)

This information should provide all the information you need (i.e., framework or points of reference) to begin a study of what actually occurs when you try to put these "New Perspective" trading tactics into practice. (These positions are exited as soon as you see a reversal in the ten-minute baseline.)

 

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Sunday | September 25, 2022

You wouldn't have really made this trade since you don't trade the initial hour opening the new week (spreads are too wide). But, for the sake of verifying (or disputing) the validity of the "New Perspective" protocols, note that at 2:32 PM PST, the system would have recommended selling USDJPY @ 143.54 due to the fact that...

1. Price was rejected by the two-hour temporal resistance level.
2. It was also bouncing off the top of the six-minute price range envelope.
3. And it was also rebounding off the top of the 8½-minute (NOT ten-minute) dynamic adaptive price range envelope.
4. And the rate crossed under the six-minute baseline.
5. And the six-minute baseline formed a downward hinge. (This is an aggressive entry. The more conservative move is to wait for candlesticks to cross under the ten-minute baseline and for the ten-minute baseline to form a downward hook. Since you are using three versions of this measure, the more prudent entry would have occurred eight to 12 minutes later, depending on which version of the moving average served as your trigger signal.)

Protocol says to exit the position when the two-minute baseline crosses above the six-minute and/or ten-minute baseline. That happened a little over an hour later at 3:38 PM PST (143.43) and would have returned somewhere around $15 for the purchase of a single contract, assuming a typical spread, or $13 after fees.

On the other hand, none of the above is actually true because, after taking a second look, you realized that USDJPY is displaying a bullish eight-hour price flow, which means you would only be looking to enter long positions (selling would not have been an option).

 

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USDJPY is displaying a bullish eight-hour price flow, which means you should only be looking to enter long positions (selling is not an option).

Since its eight-hour price flow is bullish, the only possibility offered by USDJPY thus far was the following…

At 3:00 PM PST, price made contact with the lower bands of both the six- and 8½-minute price flow envelopes. Once this happens, it is time to start watching out for the two-minute baseline to cross above the next immediate one or two slower baselines.

In the lower-panel price anomaly channels, this meant that the oscillator measuring the relative position of price within the 8½-minute dynamic adaptive price range envelope breached the zero level, as did the oscillator that measures the distance of the close from the six-minute baseline.

The candlesticks breached the lower band of the 8½-minute dynamic adaptive price range envelope again, just 16 minutes later at 1:16 PM, Reinforcing the argument to watch for the six-minute baseline to cross above the immediate next one or two slower baselines.

This event took place at 3:37 PM, as already noted in the previous post, @ 143.38. Now it was time to watch for the two-minute baseline to cross below the six- and ten-minute baselines, which would constitute the exit level. This happened at 3:17 PM. However, it wasn’t until 3:26 that the six- and ten-minute baselines took on a reversal structure, with the two-minute baseline crossing below them shortly afterward, at 3:28 PM PST. Consequently, you might slightly modify your exit signal to include both the two-minute cross AND the six- and ten-minute reversal structure.

In any event, this trade would have essentially be break even, reaping only two to six pips’ profit at the most. You could have remained in the position until price hit the two-hour temporal resistance level up at 143.52, but there would have been no rhyme or reason to doing so, other than the fact that the 20-minute baseline was bullish. Still, doing so would have been folly, even if it worked out for you this time around, because there was not guaranty that the rate would rist to resistance rather than fall to support, and there was nothing to prevent the 20-minute baseline from changing it bias from bullish to bearish.

Better to be satisfied with break even in this case, knowing that those instances in which price will go on a tear (execute a run in the anticipated direction) are going to present themselves sooner or later.

Plus, you can always go look for other opportunities, such as that offered by AUDJPY at 4:42 PM PST, again based on the two-, six- and ten-minute measures, with an entry level at 93.61 and no exit yet, with price currently at 93.81.

This same three measure setup was observed being offered by EURJPY and AUDUSD at 4:41 PM (EURJPY also offered the four-measure setup at 3:13 PM, as did USDCAD, and EURUSD and USDCHF at 3:32 PM, not to mention GBPJPY and GBPUSD at 4:11 PM).

 

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"New Perspective" Trading

After one day of analysis, I have determined that the New Perspective style of trading, which places an emphasis on the two-, six-, 8½- and 40-minute measures, is NOT as "good" as the New Phase approach, where the main emphasis is on the 20-minute baseline, with the six-minute baseline also being extremely important...at least in my opinion. This is because as these opportunities unfold, it is not uncommon for them to fail to fully develop.

Accordingly, I will base my decisions primarily on the latter, and simply keep the former in mind to perhaps influence my decisions in a productive manner, but not serve as the main driver of my actions in the market.

 

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HANG FIVE!

After one day of analysis, I have determined that the New Perspective style of trading, which places an emphasis on the two-, six-, 8½- and 40-minute measures, is NOT as "good" as the New Phase approach, where the main emphasis is on the 20-minute baseline, with the six-minute baseline also being extremely important...at least in my opinion. This is because as these opportunities unfold, it is not uncommon for them to fail to fully develop. Accordingly, I will base my decisions primarily on the latter, and simply keep the former in mind to perhaps influence my decisions in a productive manner, but not serve as the main driver of my actions in the market.

Regardless of what I had planned to do, there is no denying that, though the New Perspective protocol did not improve on the New Phase approach to trading NADEX Knock-Outs, my eyes believe they have seen something that just might.

And given that there is something within me that cannot be satisfied with "good enough" when I think I can make something even better, I simply HAVE to explore this new technique, with can be summed up as trading the 80-minute price range by riding the 20-minute price flow. If it actually does improve on what is already working, the above image will help me find this post in the future if, for some reason, I want to come back to it.

 

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And given that there is something within me that cannot be satisfied with "good enough" when I think I can make something even better, I simply HAVE to explore this new technique, with can be summed up as trading the 80-minute price range by riding the 20-minute price flow.

More specifically, if the 20-minute baseline makes contact with or breaches the 80-minute price range at 0.20% deviation, I will enter a short or long position, as appropriate, when the slope of the baseline switches direction from veering away from the 80-minute baseline to progressing toward it. I am anticipating that this particular mean reversion/regression toward the mean tactic will almost always lead to the purchase of profitable knock-outs.

Up from $40,478.25 yesterday

 

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DOING THE MATH ON NADEX KNOCK-OUTS

To determine the profit or loss from a Nadex knock-out, subtract the sum of what it cost you to purchase the contract(s) plus the fee to open the position plus the fee to close the position from what you received when you Buy or Sell to Close the position.

So, in this case, you made $39.00 - ($18 + $1 + $1) = $39 - $20 = $19

Consequently, if you have a $10,000 account balance, I would recommend you trade (speaking to myself) five to ten contracts at a time (per position) so that, on average, you are making roughly $100 per transaction.

 

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After one day of analysis, I have determined that the New Perspective style of trading, which places an emphasis on the two-, six-, 8½- and 40-minute measures, is NOT as "good" as the New Phase approach, where the main emphasis is on the 20-minute baseline, with the six-minute baseline also being extremely important...at least in my opinion. This is because as these opportunities unfold, it is not uncommon for them to fail to fully develop.

It turns out that the same thing is true when you try to surf the 80-minute price range...

The vertical lines mark two examples of the same setup. In the first case, the rate failed to follow through. But, in the second, price went on to drop significantly. Until and unless you figure out why the potential opportunity fully developed as envisioned in the second instance, but not the first (or if this is even possible) I recommend that you don't pursue this tactic any further, as well. Just stick to the "New Phase" version of Numerical Price Prediction.