I am about to share what we believe to be a very simple Free binary Options Trading strategy that we developed for trading on 0 - 100 Binary Options exchanges like Nadex.com and Cantor Exchange and IG Index. This strategy was developed to use as a kind of simple solution to trading Out of the Money Binary Options that expire the next day at 3:00PM eastern time on Nadex. We have developed what we call our Multi swing Profiler to crunch numbers and hand out some strikes with probability along with a dynamic trend direction. Binary Options traders are welcome to use this currently free tool on our site. All that we ask is that you become a registered free member and if you find the tool useful please share it with others.
We are essentially buying an OTM ( Out of the Money ) Option early in the new GMT day that will expire about 19 hours into the next day on the Binary Options exchange Nadex.com for the purpose of this example. We will let our computer do some of the heavy lifting for us crunching some numbers and looking for a probable OTM strike. We are not going to hold the trade until expiry this is more like some short term scalping as best we can do on a Nadex Daily Binary Option. So we will build our hypothesis using the data from our Multi Swing Profiler and put on what we hope to be a fast and profitable trade.
2. Now that we have a direction we look for the stars on that currency pair: No number crunching here because these stars outline the strikes that are inside each currencies average swings on the day up and down from the open of the day. So we are forming our hypothesis by finding the trend and then looking for a strike that is reasonably probable based on the average historical swings of the market.
3. We are looking for a good priced Binary Option: To do this basically we are looking for the furthest swing out from our current open price that is still starred. We want it further out of the money so that on an exchange like Nadex we can purchase the contract cheaper. One thing to remember with Options trading in the USA is that it involves kind of an Auction mentality and so you are trading against other savvy traders and market makers that are looking for value so we are trying to use our tool to discover this speculative value early on and be the first to buy or sell that contract in order to get in or out with profits before most other traders. A good price is very subjective so here are some guidelines to consider related to pricing. Remember we don't want to trade what options traders call Lottery tickets because those are not well priced options they are in most cases highly unlikely bets with odds dramatically against the trader hence the name lottery tickets.
Green Currency pairs: We are looking for an OTM ( Out the money ) strike above the open to Buy priced between $20 - $30 the closer to $20 the better for our buy side trades.
Red Currency pairs: We are looking for an OTM ( Out The Money ) strike below the open to sell priced between $70 - $80 the closer price is to $80 the better for us on the sell side.
TIP: If you are planning on riding a market trending up then let the market fall a bit to the nearest support on the day so that you can get as good a pricing as you can. When you are planning to sell then let the market rise closer to the nearest resistance on the day. Of course in spite of the MSP tool you still should be watching your charts so that you can get a better price for your trade.
Remember a penny saved is a penny earned especially when trading Binary Options on American style 0 - 100 exchanges.
Now this is why I mentioned getting in as best as you can at a good price because you might be able to get in and out with more return the closer you can get to the right side of $20 or $80 depending on your direction. The above numbers are some generic exits I might use if I am falling a sleep and wont baby sit the trade. However I really suggest that anyone trying this strategy take a few hours and watch the trade play out because sometimes price will stall just shy of these numbers and if you are there to watch your trade then you can still sell and leave with profits. I am going to show you an example trade based on this theory in a second where that is the case. This trade is a demo trade and I want to point out to everyone trying Nadex for the first time and even for the savvy user it is best to practice executing a new strategy to you in a demo account. Get proficient with the strategy and then make your decision to go live when you feel comfortable. Learn your lessons in demo and have sympathy for others who chose to pay full price for this same education.
Below I am going to show an example of a fast trade that made roughly 25% profits in about one hour 20 minutes using this simple strategy and the analytics we share for free in the Multi Swing Profiler. After that I will talk about some tips to hopefully help add a little punch to this simple strategy.
Here is the USDYEN Profiled just after 8:10 Eastern time Aug 22nd and this means there are new lines and stars to outline a profile for the new GMT day. This is why I am setting my exit for 3:00PM EST the next day and I can either get in and out quick or the market might turn on me and if I still think I have a chance then I will let the contract ride over night and look at it when I get up the next morning. These are OTM strikes and very speculative so I can't expect to win all of them. However I am trading on Nadex and they are an exchange. This is not all or nothing I can leave with some of my risked capital or as mentioned leave with profits even before the generic Take Profit values I gave earlier of $58 and $42.
2. I look at the stars and I see a 99.219 Strike for Murrey Math line 8/8 and yes my percentage here is showing 0% but again I am not intending on holding this trade all the way and I don't even care if it reaches the strike of 99.219 all I want is a realistic swing based on crunching some of the average swings of the currency pair. Now if this trade actually hit 99.219 on Nadex I could get $50 but remember our generic number is going to get us out earlier before that even.
Also you will note that the swings below the open looked more probable at the top of this GMT day and I could have waited to see if I see a change in the trend and then tried to find a strike to sell and honestly that probably would have been better but I was trying to just go through the entire process start to finish and have something to help illustrate this strategy in action. In this strategy the stars that outline the average swings are imperative and the probability percentages are more subjective and not entirely critical. I might have held on for $42 or even $50 if those percentage numbers had looked better as an example.
OK So in this picture above you can see me going in and doing the trade in and out. I bought 99.20 because it was a strike just BELOW our Murrey Math line number. Since I am looking to buy in a perfect world I will get a strike from Nadex that is just below the Murrey line and if I were looking to Sell in a perfect world I would get a strike just ABOVE the Murrey line. You can see that I got in this position Buying 2 contracts at $29.50 ( right below $30 this was not something I would write home about LOL ) and then I sold those 2 contracts back just under one and a half hours later for $38.50 . Next picture is a chart with the market and I want to talk about a few things on it.
OK now on this chart you can see an arrow up over the 5 minute candle I got in and an X where I got out. You will notice the price moved against me for a while on the chart. However on the Nadex platform price did not float more than $4 per contract against me because remember these are options and I had all the way until past the middle of the next day in order for my option to pay out. There is a premium on time and it was still on my side because I got in early. When price is not rapidly deflating on you it is a bit of a help with psychology to help you hold a trade and the fact that my MSP indicator never just turned and went Red on me and the chart shows my envelopes painting an up trend for me all helped me stay cool and just hold the trade.
After testing the lows we bounced pretty strong and got close to my $42 take profits exit on Nadex but it stalled and I decided to take the profit and leave. There are a few reasons why.
2. I bought a contract with almost 19 hours left and could leave in under one and a half hours with 25% profits roughly.
3. I could see that pinbar forming on my chart so price action was telling me bulls and the bears were fighting and if I took my money and left I did not have to care who won that fight.
OK that is it all there is to this simple strategy but before we wrap up I want to share some tips that might help you enhance this theory a bit.
Were all UP then it would have been stronger for my buy because that would have meant the market was really smiling on the dollar. Early in the day you probably wont see that but at times you will see this on the Market Swing Profiler.
2. Check to make sure that there is no major news standing in your way as you are doing the trade. You don't know what actions news will elicit from the markets. This is just a speculative technical trade and there is an old joke about technical traders sitting in a room with no windows.When ENTIRELY technical traders get in the way of fundamentals or market sentiment most of the time technical trades will take it on the chin. So don't be like we were when we first started speculating and instead take a look out your window and see what news is pending related to the currency pair(s) you are speculating on that day.
3. Pull up a daily chart: In the best of worlds you are looking for buys when the market is moving up the last couple of days and you are currently around a low of the day on the current day. Now it was early on in this trade and in this strategy it always will be but it is good to at least see that on a longer time frame you are not just fighting the daily trend on a Daily binary option. Remember the trend is your friend so pay your friend some attention.
That was the last of my tips and we hope a lot of people can really enjoy building some simple speculative trades using our Multi Swing Profiler and this strategy at the top of the new GMT days trading Binary options on Nadex and other 0- 100 binary options exchanges.