Trading Nadex Binary Options

[WklyOptions]

T2W traders,

I have summarized some of my comments and observations on trading the Nadex binary options (only for US residents) from the Home Trader/ Home-Based Trading Career Pathway & Journey thread (combined posts #70, #71).

I thought if any T2W trader is interested in Nadex binary trading, it is much easier to organize and post it here. So - again - here is a summary of my journey w Nadex binary trading thus far:

The Nadex binaries are available for US residents only. The Nadex binaries offer fantastic and plentiful opportunities to trade Out-of-The-Money (OTM) strikes that can become In-The-Money (ITM) at expiry. This feature allows traders to be able to trade Nadex binary options where we can achieve Reward/Risk profiles better than 1:1.

Nadex binaries have Daily and Wkly expiries - so I am very familiar with the volatility effects of the various OTM strikes. In addition Nadex binaries allow the trader to be able to exit at anytime desired - and at "fair" prices. Liquidity is also very good. :clap:

Nadex offers 2-hr expiry binaries also during the NY trading session. These are great for me to trade against 30min to 2hr trends and breakouts while achieving Reward/Risk profiles > 1:1. There are 2-hr forex binary options available for overnight sessions like the Asian or London sessions (I am based on NY time).

The properties of Nadex binaries are much more similar to the listed weekly options on the CBOE that I trade heavily with. And with Nadex - winning positions can be partially hedged quickly to lock up profit windows.

Nadex disadvantage: no short-term binary expiries for < 60 mins. Nadex trading usually means trading on Hourly or 2-Hr price trend/momentum charts.

Funds deposited into Nadex accounts are regulated by the CFTC - and client funds are segregated. Nadex is not permitted to use deposit funds for their operating leverage or for trading on their behalf. Withdrawal is easy and quick - funds deposited back to client bank accounts within 3-5 trading days.

However - I recommend routine scheduled withdrawals of profits every 4-5 weeks to test and train the Nadex team to meet my trading Standards. Never hesitate to test frequently any/all brokerage firms you use! Even if they "pass" routinely - make it a risk-management "habit" and Standard to test continually and regularly. :idea:

Nadex offers an excellent portfolio of binary assets - indices, commodities, currencies. Their trading platform is well-organized, easy to learn, and the real-time execution and price fills/feedback are quick and seamless.

Nadex offers a demo platform - it is recommended that interested T2W traders first apply and then learn and practice trade execution with the Nadex demo platform.

The initial account funding is very low - something like $100 USD. Usually the minimum trade size is anywhere from $20 to $60 per lot per trade.

In summary - Nadex binary options trading is an attractive professional-level trading platform for US-based traders. In the near future, I will begin to post my Nadex campaigns here - but not every trading day. There will be way too many Nadex binary setups and trades being executed. I will post Nadex trades that have key Lessons Learned for all traders. :smart:

Thank you.

WklyOptions

 

[WklyOptions]

Nadex Binary Options trading plans/ePDFs

T2W traders,

If you like more reading materials on trading binary options in general, I have listed a couple of ePDFs focusing on binary options trading. :idea:

For the sake of brevity - just go to:

Home Trader / Trading Euro-Style Binary Options (Post #3). :!:

If I find more Binary Options trading plans/related items - I will post these in the future.

Regards,

WklyOptions

 

[WklyOptions]

Hi, T2W traders,

Here are two Nadex Hourly trades done during the Tokyo session on 07/28/2014. 1st trade loss – then recouped net win on 2nd trade.

I used the Nadex 2-Hr Expiry binary options on USDJPY - but only made Entry trades when these binary options had < 1 hr to expiry. Risk = (-$500). Duration = 1 hr.

T1 Trend = Up on Daily USDJPY. T3 Trend = Up on Hourly USDJPY. (attached #1, #2)

Hourly Volatility using ATR = 2.7 pips and the Nadex 2-hr binary expiry on USDJPY strike interval is 1.0 pip. So make sure OTM strike price < 2 pips from the current USDJPY price. :!: :idea:

0145am ET: Trade 1 – USDJPY 101.803 zone. Entry (0300am ET expiry) > 101.82 (OTM binary). BTO 12-lot @ (40.00). Max Risk = (-40.00) per lot = (-$480). Max Profit = (+60.00) per lot = (+$720). Reward/Risk @ 1.5.

0300am ET: Trade 1 = expired OTM = Exited at (18.50) = Loss (-$500.00) total. :whistling :!:

0300am ET: Trade 2 – USDJPY 101.811 zone. Entry (0400am ET expiry) > $101.82 (OTM binary). BTO 23-lot @ (43.50) per lot. Max Risk = (-43.50) = (-$1000.50). Max Profit = (+56.50) per lot = (+$1299.50). (attached #3)

Executed planned scaled exit @ 13-lot (83.50) and 10-lot (94.50). Normally will NOT hold to Expiry. Pls disregard order ticket window details directly - just used this window on Nadex to clearly show Bid/Offer data. (attached #4, #5)

0400am ET: Trade 2 - Expired ITM with winning outcome of (+$1030). (misprint at attached figures)

13-lot x (83.50-43.50) = 13*(40.00) = (+$520)
10-lot x (94.50-43.50) = 10*(51.00) = (+$510)

Trade 1 Loss (-$500). Net profit for Asian session this morning = (+$530). :clap:

Lessons Learned:
(1) If trading with Nadex 1-Hr expiry OTM binary option: the ITM strike distance is < 1-Hr ATR. :idea:
(2) Be ready to fire 2-3 trades into the setup – IF and ONLY IF – the T1, T3 charts still bullish. :!:
(3) Do NOT hold profitable positions to expiry. Better to exit at pre-set scale-out limit orders. :idea:
(4) Stop trading at end of Asian session as liquidity dries up.
(5) Look to resume trade at London session and into 1st 2-3 hrs of NY session using USDJPY. :smart:

Will post other charts of interest – especially if dealing with losing streaks.

Appreciate any questions, observations, constructive comments. Thanks.

WklyOptions

 

[WklyOptions]

Hi, T2W traders,

More relevant observations/lessons to new binary traders/players to Nadex:

(1) I like to trade only the USDJPY for Asian and London sessions for my forex pair on the Nadex platform. Specifically the 2-hr expiry options on USDJPY. Why?

Because the Nadex 2-hr expiry options have a strike of only 1 pip for the USDJPY! This is fantastic from an EDGE based perspective - especially if you track and understand how to exploit volatility on H2 or H4 charts! :smart:

Have only a 1-pip strike pricing distance means that I almost always am able to trade using OTM binary options with 1 hr to expiry. This gives me profit payouts > 100% since most of my Entry price is something like between $30-$45 per lot max risk - but the profit potential is between $55 - $70 per lot if these OTM binary options close ITM.

This is MUCH BETTER than Eurostyle binaries.

(2) For the daytime (USA east coast based) session on the NY schedule, I like to trade the Gold, Russell 2000 e-mini futures, USDJPY = all using 2-hr expiry options.

Again - these have extremely tight strike price levels - relative to the volatility of these assets. I trade using OTM binary options - unless the strike is > the ATRs for example - then choose closest ATM or ITM options.

The tighter the strike price levels are VS its ATRs or Std Devs or etc (however you choose to measure volatility) = the greater the chance for us to be able to trade binary strikes where payouts > 100% vs risk/bet size for winning trades! :clap: :smart:

More to follow soon from Mon's action on the Nadex USDJPY for 7/28/14...

Regards,

WklyOptions

 

[WklyOptions]

Hi, T2W traders,

Well, attached are two charts for your studies on Nadex USDJPY using 2hr expiry options:

(a) Dominant Trend higher time frame = H4 on USDJPY (date on 7/28/14).

(b) Note "Green" = Asian session, "Red" = London session, "Blue" = NY session.

(c) Entry Time Frame = H1 on USDJPY. Used the 2-hr expiry options but only when it had < 65 mins left to expiry. I was able to focus on - and trade - using only the OTM binary options for payouts > 100% on winning trades. :clap:

Losing trades = (-100%) losses! :whistling

Lessons Learned:

(1) Note that H4 Dominant Trend (chart 1) has been bullish for several trading sessions/days. This shows the power - and the need to learn the skill-set to be able to identify Dominant Trends clearly. :!:

(2) Received two (2) Triggered Alerts on H4 - during the H4 pull-back zones. These Triggered Alerts then forced a "transfer" of attention/focus to the H1 time frame.

(3) Received H1 Qualifier Setup trigger (chart 2).

(4) Received H1 Entry Trigger immediately next H1 bar.

Then used OTM Nadex 2-hr call options sequentially rolling over to the next 2-hr binary options for the next H1 bars.

Target = must get to Net (+5u) per "momentum burst" on H1.

(5) Results sequence = W - L - W- W - W - L - L -W = then out w Net (+5u).

I used a progression < Martingale because payouts > 100% per winning bet. But still had to have sufficient bankroll PLANNED and READY TO USE for up to a possible NASTY sequence of 7 consec losses if necessary! :!: :whistling

Done w Nadex for the day. :clap:

The per-trade "bet size" ($) was not small. But - Nadex offered plenty of liquidity esp on the USDJPY asset options! Never any problems w fills.

So - this is my basic approach w Nadex OTM options - usually try to get Net (+5u) per trading day.

Note that trading Nadex 2-hr options on USDJPY, Gold, Russell 2000 e-minis = not necessarily trading every single session every single day!

Only when getting Alert Triggers firing off on setups vs volatility.

The rest of the time, my trading is focused on trading listed weekly options from the CBOE.

Plus trading short-term Eurostyle binary options (M5 and M15 bars off M30, H1 setups) when I can. With these, again, also - I go after Net (+5u) per "momentum burst".

Questions? Ideas/observations? It takes a LOT of time and effort to organize charts, attachments, and enter posts on these threads for the general T2W members/traders. :whistling

Feel free to PM or email me if you want more in-depth discussions, observations. I have many more specific trade results/campaigns, charts, etc. Those T2W traders that I communicate with frequently/regularly via EM or PM know that I reply to all questions/discussions in private - usually within 1-2 days.

Closing Idea = you can trade smart using binary options and it will pay off. But learn to focus on trading only "momentum burst" price moves off higher time frames! :smart:

Best regards,

WklyOptions

 

[WklyOptions]

Binary Options trading signals & services

Hi, T2W traders (also posted in the Eurostyle binary thread),

Back at it in the NY session for now. While awaiting for new setups, I'd like to take a moment to answer a couple of the EMs/PMs I received on questions about binary options trading signals/services.

A good source is to Google the different reviews on binary options signals and services. Below is a link to one of many reviews for binary options.

http://www.fairbinaryoptions.com/signals/top-binary-options-signal-service/

Please take the time to read and review the above link at your convenience to get a better idea of the different binary options signal services available. :smart:

The important factors to consider (at least in the way I practice my trading profession) include:

(1) Realistically, how much time daily will you set aside to focus and operate as a binary options trader? Which sessions (Tokyo, London, NY)?

In my opinion, if you are trading M1 and M5 bars - then you really only need to "sit and focus" for a very short while like 1-2 hrs per day.

There are chatroom trading services that cater to trade M1 and M5 time frames. These are filled with high energy, often loud, numerous M1/M5 charts. The moderators tend to jump around frequently from chart to chart - they have to b/c of the very short term trading periodicity. "Franco's" chat trading room at Binary Options Trading Signals is one example.

Disclosure: I am NOT a fan of such chatrooms - just too chaotic and noisy for me. It is not my trading style. But others love that energy. So you must again find the proper chatroom signal service to fit your personality and trading style (just like finding a fit to trade the binary expiry to the correct time frames).

(2) Auto-bots, Auto-binary signals, etc. In general, again I am NOT in support of using auto-bots, etc. In my opinion, these generate way too many signals - the signal vs noise ratio is too weak. Volatility patterns, liquidity, momentum, all change during different sessions and days.

I have heard numerous horror stories of how auto-bot trading generated a short time of profitability - and then gets hit with massive equity bankroll drawdowns! Esp when volatility and momentum patterns change on a longer-term basis. Then the binary trading accounts get wiped out - many times the retail trader is not even aware/around when this is happening.

Auto-bots tend to generate bad trading habits - most importantly - the retail trader is most likely to "expect", "anticipate", winning returns - but without accepting any real degree of responsibility and respond-ability during adverse drawdown periods!

High Frequency Trading firms trading on automated signals are a different class from binary/fx auto-bot trading! These HFT firms have professional traders and risk managers that monitor, adjust, and are truly responsible for the bottom-line $$$ results! :whistling

(3) There are also non-chatroom trading services usually operate on the basis of sending out trade recommendations via emails and/or SMS. Prices vary but usually between about $100 - $200 per mo (higher prices for much more intensive services for professional-level traders especially on hedge fund/bank trading desks).

(4) Then there are the hybrid binary options trading services that have both a chatroom and also email/SMS alerts transmitted to its clients. The hybrid services are almost always NOT trading M1, M5 charts. The "fastest" I have seen in the past are alerts for M15 setups. These usually have higher monthly fees between $250-$600 per month.

They are termed "hybrid" services b/c they provide heads-up alerts via emails/SMS before the setup becomes traded. Then its clients can quickly enter the chatroom(s) and link up with the professional trader/moderator. They share charts, discuss only that setup that is happening in front of their eyes. This way clients do not have to "jump around" with the moderator(s) to find trades - they are called to the chatroom because there is a specific trading campaign about to start. These hybrid services are divided on the basis of the 3 major trading sessions (Tokyo, London, NY) - and usually trade aggressively. As anticipated, hybrid binary options trading services are more expensive - more detailed and focused for the pro-level trader, minimal noise, minimal conversations not assoc'd with the trading at hand, etc. These hybrid sessions tend to be more strict and run more like trading desks/teams.

One rare advantage with the higher-priced hybrid pro-level subscription services: you have full access to their system developers, risk managers. They will almost always give you all their indicators and help setup your monitors accordingly to best fit their hybrid services.

Disclosure: I am NOT affiliated nor compensated in any manner by any of the above binary options trading services.

I do use a couple of live services mostly for trading alerts and setups esp for my trading on the listed weekly options from the CBOE.

For my Nadex and Eurostyle binary trading - I do use a service to help get me trading alerts that I have found to fit my trading style.

Disclosure: I spend about $600 per month on subscriptions to alert services. However, my smallest bet size is $500 - so the net effective % cost for these alert subscription fees are a tiny % of my expenses. I also spend $$$ on 2 professional-level datafeeds for stocks, forex, options feeds.

In summary - the pros vs cons - of using any alert subscription service(s) is highly debatable and highly dependent on that trader's time frames and trading style.

Much of it is a discovery approach - the trader will enroll in a free trial basis - find out if it matches the trading style, the time frames, the Reward/Risk profile, the desired # trades per wk or per month, etc.

Be careful w trading services - unless your trading Standards are sufficiently high - most will turn out to be $$$ wasted and/or unnecessary and/or unprofitable "expense items".

Most important = you must accept responsibility and respond-ability = for the final $$$ results. You cannot really blame any of these services even as a paying client. The ultimate act of taking a bet, accepting risk, and managing open positions - all ultimately fall on your shoulders! This aspect of professional trading cannot be shifted elsewhere but to yourself! :smart: :idea:

If you should decide to seriously investigate and try out a binary options trading service/signal - please share your findings with the T2W traders here. Also feel free to ask me via PM or email if you have more detailed questions about this topic.

Good luck & best regards,

WklyOptions

 

[WklyOptions]

Train your eyes to "see" momentum bursts = examples on H4 charts

Hi, T2W traders,

FYI - just noticed a few H4 charts on the major pairs showing some pretty good mojo = momentum bursts seen on AUDUSD, USDCAD, and USDJPY.

Of course, my favorite for Nadex trading 2-hr options is the USDJPY.

Guess what - I'll be trading this one now and try to lock up (+5u) on the USDJPY.

(1) T1 H4 = strong bullish momentum = Burst ON. (see #1)
(2) T2 H1 = currently in pull-back = Burst OFF. (see #2)

Waiting to get trigger for bullish Entry on the T2 H1 criteria.

This Nadex USDJPY will take several hours (at least some 7-12 hours minimum) - maybe a day or less to get to Net (+5u) using 2-hr binary options here.

The Eurostyle binary options game has the advantage of using M30 as my T1 setups - so in that game - I can often get Net (+5u) per session.

Note: While I am trading USDJPY on the Nadex 2-hr campaign, I will also be trading on the Eurostyle 30-min T1 campaigns - although not on the same USDJPY if I am trading that on Nadex. I'll look for a different pair for the T1 M30 Eurostyle binaries.

Okay - buckle up, put the gloves on, helmets on - full tank - GREEN LIGHT! :clap:

Be patient for now! :whistling

Regards,

WklyOptions

 

[WklyOptions]

USDJPY - Nadex - H4 and H1 - Bullish Burst Alert ON

T2W traders,

Just a brief update on USDJPY H4 and H1 status:

1. H4 bullish burst alert triggered ON. (see #1)

2. H1 bullish burst alert triggered ON. (see #2)

At least 5-10 hrs more on this Nadex USDJPY H4=T1 campaign! :whistling

Regards,

WklyOptions

 

[WklyOptions]

USDJPY T1=H4, T2=H1 - Closed - Net (+5u) Tokyo Session

T2W traders,

Just a brief update on USDJPY H4 and H1 status:

1. H4 bullish burst alert triggered ON. (see #1)

2. H1 bullish burst alert triggered ON. (see #2)

At least 5-10 hrs more on this Nadex USDJPY H4=T1 campaign! :whistling

Regards,

WklyOptions

T2W traders,

0900am ET - This USDJPY trade was initiated a few hrs earlier during the Tokyo session. The T1=H4 time-frame had a Bullish Burst Alert Triggered ON. Then only had to wait a short while - and then the T2=H1 time-frame also had a Bullish Burst Alert Triggered ON.

Then the Nadex USDJPY 2-hr binary calls were taken (each with 60 mins expiry) using ATM or OTM strikes.

This USDJPY momentum campaign moved quickly favorable and was closed out hitting our Target = Net (+5u) for the campaign! :clap:

The Results Sequence was: W1 L1 W2 W3 W4 W5 = out and done Net (+5u).

See how straight-forward binary momentum trading really is? You must only "trust" that momentum bursts will be followed by more price action in that trend for the next several price bars! :smart:

Well - time for the NY session now. Will look for Eurostyle T1=H30 setups this time.

Questions? Ideas? Observations?

Regards,

WklyOptions

 

[WklyOptions]

Week's Closed Nadex Binary Options Results Net (+11u)

T2W traders,

(0455am ET) Fri 08/01/2014

I will be traveling so no more trading this week. Plus today is the NFP data release!

Just a brief wrap-up of the Nadex binary options trading results:

Nadex Binary Results

07/28/2014 – Tokyo Session (0300am ET) = USDJPY, T1=Daily, T3=H1, Net (+1u)
07/29/2014 – London Session (0500am ET) = USDJPY, T1=Daily, T3=H1, Net (+5u)
07/31/2014 – London Session (0900am ET) = USDJPY, T1=Daily, T3=H1, Net (+5u)

Net for the week = Nadex Binary Options over 3 Sessions = Net (+11u) :clap:

Please note that I used T1=Daily and then zoomed in on the T3=H1 charts for my Entry and campaign management.

Obviously the Nadex Binary Options Trading Net (+11u) was < Eurostyle Binary Options Trading Net (+30u). The Nadex had to use M3=H1, so lost at least 50% or more in Opportunity Factor! :whistling

Lessons Learned on Nadex Binary Options Trading:

(1) Every session allowed for the "discovery" of Momentum "Burst" Alerts - in one of the major currency pairs. :whistling
(2) It did not seem to matter bullish vs bearish "Burst" moves - both were profitable.
(3) Reaching for Net (+5u) per Session "Burst" campaign was achievable - and correlated with the back-tests and Binary Options Trading Plans.
(4) Price volatility between the T1=Daily and T3=H1 time-frames (and momentum moves) were precisely in accordance to the expected metrics achieved in the back-tests and as per the Binary Options Trading Plans.

Do NOT rely on gut feeling, intuitiveness, impulse trading = all too difficult to trade CONSISTENTLY on a DAILY basis! Even more difficult if the trader is trying to scale up the $$$ bet size!

Closing Summary:

(5) Please note the relative consistency of the T1=Daily and T3=H1 charts. T2W traders can go back over these charts and generate ideas for themselves.
(6) Nadex Binary Options behaved according to its Trading Plans.
(7) Nadex Binary Options is a perfectly manageable asset for professional traders to exploit and execute trading EDGE(s) repeatedly.
(8) Traders MUST HAVE STRUCTURE & PROCESS in place via Trading Plans! :smart:
(9) Use of the immediate OTM or ITM Nadex Binary Options represented excellent price fills and favorable profit/loss payout ratios.

I hope that at least some of the T2W traders followed along at least one of the T1 and T3 charts in the above sessions - to see how to use these assets to profit consistently!

I will continue to trade next week after Tues (on vacation thru Tues). Have a great weekend!

Good luck to T2W forex traders that will be trading around the NFP release!

Regards,

WklyOptions

 

[antoniodr]

Binary Options Brokers

Hi WklyOptions, can you suggest me some brokers that offer CBOE binary options and the American Stock Exchange binary options.

Thanks in advance.

 

[WklyOptions]

Hi WklyOptions, can you suggest me some brokers that offer CBOE binary options and the American Stock Exchange binary options.

Thanks in advance.

Hi, antoniodr,

The CBOE and AMX binary options are quite different from one another - and also different from Nadex.

May I ask why you are looking into the CBOE binary options (S&P500, VIX) vs the AMX binary options (some 70+ equities)?

Are you a non-US resident such that Nadex is not a viable "option" for you (pun intended)? If - you are a US resident - the Nadex is the best binary options platform available for individual traders. Nadex offers liquidity, near 24/7 trading opportunities, huge # of trade-able assets with 2-hr, Daily, Wkly expiry schedules. Plus - Nadex settlement pricing is easy - it is the inside final 25
"last" (or mid-price for forex) prices on non-forex assets. Then the top 5 & bottom 5 are discarded. Then take the arithmetic avg of the final inside 15 "last" to get settlement price.

This is best b/c it allows expiry pricing to be based on that day's closing trades.

The AMX binary options are a bit more challenging - because of its settlement expiry calculations. It uses the NY Byrd system which is a volume-weighted, time-series, averaged settlement price on the last trading day prior to expiry. Very unattractive settlement price calculation for the individual trader!

I'd strongly suggest you stay away from AMX binary options. :!:

The CBOE binary options available are only for broad-based indices such as the SP500 and the VIX. Again, its settlement calculation is also quite different. Settlement expiry pricing is calculated from the last trading day's OPENING prices of the individual components of these broad-based indices.

In addition the expiry schedule on the CBOE binary options are very limited to only the first 3 months settlement/expiry dates.

Again - I do not recommend trading CBOE binary options. :!:

Sorry to get off-track from your question - but I thought it is important for T2W individual traders thinking about US-based binary options - that stick to the Nadex (if US resident) - or go with CBOE and its weekly/monthly options.

antoniodr - There are much better alternatives for you to trade on US equities if you are looking for some options-based speculation and/or defensive hedging. :smart:

Specifically to your question: No - I don't know of any major US options brokers providing CBOE or AMX binary options. I use TOS (and IB as emergency backup) but cannot find any contract listing to trade for the CBOE binary options (I see it on charts - but not for trading using bid/ask pricing). :|

I think if you INSIST with CBOE and AMX binary options - it is best to call CBOE and AMX directly - they should be able to help direct you to a trading desk for the individual trader desiring binary options trading. Both CBOE and AMX have very strong customer service help teams! But - again, I'd suggest stay away from these binary products.

If you are trading in Europe or Asia - there are several regulated brokers that provide binary options trading on US equities. These may be more client-friendly with much shorter-term expiry, etc. I use GOptions and Boss Capital (neither regulated).

Just be sure to do your due diligence on ALL brokerage firms you end up using! :idea: :!:

Again - if you really want to trade US equities using options - stick with the CBOE listed options products (weeklys and monthlys)! Excellent liquidity, low spreads (at least reasonable for large # units traded), etc.

I hope this helps you out some (although answer to your direct question was a null answer :whistling) - and let us know if you have more questions on US equities and options trading. There are several experienced options traders here also to help you out! :smart:

Good luck & regards,

WklyOptions

PS - T2W traders - sorry if I "over did it" with the Smiley icons! Just enjoy using these "cartoons" and expressions. I am a big kid at heart always! :whistling

 

[babyjake1961]

Are you now wealthy on Nadex beyond your wildest dreams five years into it? I can’t even hear back from them by email. Also, no idea how one could frequently and consistently return a profit with such a high ask-bid spread.