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This is another Nadex binary option scalping strategy video and this time I am doing the unthinkable and that is trading Nadex Binary Options on NFP day. OK while I am calling this a scalping video this is not going to be something with record timing but I have done things like this on and off for years the difference is that I never had a methodology that was so refined as the for lack of a better name deviation levels that are used in this video. I am going to try and break down this neutral trade in detail and while this took about 7 hours or so to play out you will see it from beginning to end.
Time to Strangle the market.
I am going to do what people with a lot of formal training call a strangle. This is neutral trading and what I mean is I am not sure what way we will break out from the open up or down. So I take both out of the money sides in hopes that I can surround aka Strangle the move inside these numbers. On NFP day once a month I am sure we will break out in some direction. So I am using the levels and probability to try and find numbers we have a good shot at touching in the day at a discount based on my model.
We designed our own deviation levels. Then we plugged in probability to them asking what is the probability based on 50 days of data that we will hit each of these levels? What I am going to use the data for is to discover WHOLESALE pricing on Nadex. Do I think these percentages are gospel? NO but I think if the prices at nadex are a lot cheaper then I will call it wholesale ( cheaper than my numbers atleast ) and I will buy them. I need wholesale because I want both sides to cost less than $50.
OK now for the scalping part. after finding two contracts to buy ( Buy up and sell down ) they cost less than $50 because I got them at what I think is wholesale based on my stats. I set them up to close at $50 on each side and I let that working Nadex order scalp for me getting me out at $50 of one of the sides and that means that I will be profitable because I paid less than $50 for both sides combined. I based my levels on stats that looked good on both sides. I also put a lot more in my favor by doing this on NFP day when I knew the market would be volatile ( Get as much as you can in your favor )
One side wins and one will lose and of course you can only do this trade one day out of the month but because I am scalping I am not even going to wait for the market to close. That is why I am profiling high and low but I could have held that trade to the end and took full value if I remember right but again this series is about scalping and all of my stats were profiled for if we touch the number based on 50 days with a high or low not if we closed there. Just another way to scalp that is time based and gives you a lot of time for your statistical arbitrage to play out.
One last thing to note here is that I try to share my views on statistics and how to really dig into them and watch out for pitfalls if you use them. Watch the end and notice what side broke out and IMHO that is because the smart algorithms will use this News trade to throw most of what they call the dumb algorithms ( that take stats for gospel and or are not managed by a human being) out of the money. If you are a large player then when can you dump all that USDJPY you been buying lower and lower at fast and in one blink with your Algo ( think like a human looking at machines ). Another sign of a surprise is just like I do with all the open trades guys go back over NFP days and loot at those 3-4 5M candles before the release ( Those are dumb Algos taking a position before the spike and market makers getting as much money ( Pending spot orders ) on the table as fast as they can to take it faster than the Ginger Bread man. None of that matters though if you are trading neutral on Nadex using the strangles.
PS: Yes absolutely at some point we will put these levels on our site but we wanted to test them and work out a few kinks under MT4 ( We are starting to push past what they mean for you to do with this charting platform I think ). Thanks everyone for all the positive feedback and questions. I am hoping this really gets your creative juices flowing.
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