I done a video a while back to talk a bit about Nadex and doing some EOD trades there. I think I posted this idea on BOD but this might be an even better forum for it because a lot of strategies are discussed more here. Now I am going to say that this is based on swing analytics one of my favorite anchors ( just because when we started we really did not use charts as much as math in our first pieces of software back in the day. However we learned fast visuals help more people but these theories can work today IMO.
Another thing I am taking Bins in the example but maybe you could do the spreads but you would have to be up and catch one of the intradays 15 to 20 Pips off your numbers and get in there most likely I guess. The Master spread is another possible thing but that just means more risk without a closer stop by both the expiration time of a spread and the fact that the intraday spreads are not as long. This is why I am using Bins and after all this is a BINARY options forum.
I am trying to adapt this idea to the 3:00PM expiring Nadex Binary Options. We are still getting a feel for how the beloved Market makers manage price,Risk and Probability on Nadex and so this is a bit of a work in progress. I am essentially laying it out in detail in this long video below but I am going to write out the essentials here and welcome any ideas to alter or supplement it.
Find what I believe to be the dominant trend:
1A. I am using Linear Regression channels on a daily chart in part to HYPOTHESIZE the direction of the market.
I am also using 3 SMA to help me further confirm this hypthesis on the dominant direction because my goal is to find a level on the day that we are bucking the trend and then set an order on Nadex on the next higher strike Buying ( $70-80 ) or selling ( between $30 -$20 ) on the daily. Maybe this can be translated to spreads also but IDK there are variables I need to consider with the difference due to these being options not just spot.
NOTES for a STOP: OK you can get into an order if it is triggered but there is no way right now to do a stop or take profit on this binary options inside Nadex. However in my mind there is the plan to exit between ( $45 - 55 ). This perserves some of your capital and lets you just setup a trade idea right or wrong with a plan of how you will exit. I am ssuggesting exiting as low as 45 on a sell or as high as 55 on a buy because these are options and depending on how long there is left and the markets conditions you should use your own discretion a bit because you do not want to exit what might result in being a profitable speculation at the end just because a Market maker set the price at $50. The price reflects probabilty based on order flow but also the spread reflects the market makers Bid and offer in most cases so that they can stay in between and make money off of both sides IMO.
2. OK now we got an idea on the trend we believe is strongest so how do we pick a strike? Time to consider the intraday not the DAILY action.
A: Bucking the trend means above average: I am popping up my FRB template if you do not have it already I am inviting you to do so again. It is Free just join the site and DownLoad it.
There are some stats on this template that summarize the average swing of the markets up and down from the open on the day. Locating a strike that is above that number from the open is probably at a minimum of what you should do. Right now you would have to add that number to the open yourself but in the future we will update it. Also another way to look at this is to go over to the Multi Swing profiler and just look at the stars there because they will mark out the edges of the average swing for you overlayed on the MML lines.
This is just a table and some people dig looking at stuff that way ( I do, it is how I started ) but some people dig a more visual chart.
B: What does a full tank of gas for the day look like? OK on the FRB template there is another helpful statistic to look at and that is the
30 day Largest swing up
30 day Largest Swing Down
Of course this is a measure of how far the swing above / below the open has been and on days with impactful news you want to gather up that number and look for a strike that would get you right around it or better.
if the largest swing + the open of the day would put me around 103.24 on the USDYEN then I want to set my strike at 103.40. When there is impactful news a good idea is to set it out or if you just have to be doing something then you want to try and get paid more for it so selling at $30+ or Buying at $70- on the order might be better. This will do one of two things stop the order from ever being filled ( news was coming and you should not be trading anyway probably LOL).
Get you filled at a better number and that gives you more potential profit if it works and more flexability to manage the trade while you are in it. Market makers or no one else wants your hot potato at a point it looks improbable. The lower you bought in the easier it will be for you to exit before this probability becomes painfully obvious to everyone.
The higher you sold the easier it will be for you to exit before this probability becomes painfully obvious to everyone. Yes there are market makers but they have an even tougher job I would imagine because they are playing in the center ( Delta ARGHHHH I am no expert on the Greeks I just know enough to get by and I have watched clash of the Titans a few times if that counts for anything ) so in order for a market maker to take the hot potato off of you there needs to be orders for them to fill with it on the other side of yours. I feel in order to understand the exchange there is a need for at least this basic awareness of how things work.
C: Now this is where I draw the line: alright this can be the first or the last step in this plan but I saved it for last here. You have some hypothetical lines on the FRB template with Murrey math and stanadard pivots. The cool thing about these lines is that you and everyones grandmother has them and some people will use areas around them as targets to exit. The mass of people and automated trading make these lines relevant. the last and most important thing to do is to just sit and draw some MANUAL REAL HUMAN made lines based on the close of some candles on the daily chart. Also shout out to myself use some wicks as well on the daily chart.
NOTE: As I said in one of my other videos if I observe that the previous day of trading had very little swing in the range then the pivots for the current day may not be as strong so if you are going to use them in your actoring move from R1 to R2 and S1 to S2. Again that consolidation on the previous day will make a squeeze and that preasure will run out eventually and that is why you can not just be purely mechanical with mechanical numbers and need to bump it up a bit on the pivots. I am not sure a lot of people think about that and instead they just get burnt a few times and say Pivots suck LOL.
Now you should be able to find a good manual line above R1 ( sell ) or Below S1 ( Buy ) that also meets the criteria we got from the swing statistics. So lastly go to Nadex and pick a strike around or slightly above this number and setup your order. Sometimes they will fill and other times not. This is a lot to read or watch I guess but really with the tools you can probably gather everything and do this in under 10M of your time invested. This was kind of inspired by Apex's premium collection strategy but it is like long term and hopefully catching a spot near where the trend will resume towards the daily sentiment and you can wake up to profits and sleep through the chop that might have caused you to exit unwarranted.