Dollars to ticks spreads question

#1

I just finished a newbie webinar about spreads. I loved it! My question is regarding what I am not understanding. I think I get that it is good to buy closer to the floor and sell closer to the ceiling to minimize basic risk and maximize basic profit, on the 1$ per pip or tick. On the NQM7 the tick is .25 How does this relate to dollar per tick? I got into 2 spreads and am not sure how to calculate the risk side based on my entry. I should have stopped losing at the floor, correct? So the mistake must be in my math with the .25 per tick as it doesn’t seem to add up. On the + 5805.0-5815.0 spread I got in at 5806.6 = 3.6 ticks X 4=14.4$ ?? Yet I am showing a loss in the screen shot of 15.00 Please help. Thank you.

#3

Actually, one tick on an NQ futures chart is worth $5.00. NQ futures tick in quarters (.00, .25, .50, .75) . NQ Nadex Spreads (US Tech 100) tick in tenths (as was mentioned above) and each tenth is worth $1. So there are two and half ticks on the US Tech 100 per one NQ futures tick. Here is the contract summary for US Tech 100 contracts that we trade on Nadex:

You can easily get this information for any Nadex Spread instrument (and they are different between instruments) by going into the Apex Spread Scanner and clicking the link icon here:

If you look at the “Equivalent instruments” section, it will tell you how many Nadex contracts you need to buy/sell to win/lose the same amount of money you would trading the futures contract for that instrument (but of course no margin requirements and limited risk) .

Your $15 dollar loss is being calculated by taking the Average Price you bought (5808.6) at and subtracting the current market market price (5807.1) or in other words, 5808.6 - 5807.1 = 1.5 and 1.5 / .10 = 15. Same calculation for the loss on 5800.0-5840.0 contract.

Your profit or loss isn’t calculated on the floor or ceiling of the spread. Your MAX profit or loss (or risk) is. It cost you $36 dollars to put on the trade (5808.6 Avg. Price - 5805.0 Spread floor = 3.6 / .10 = $36 and you could have made a max profit of $64 dollars (5815.0 Spread Ceiling - 5808.6 Avg. Price = 6.4 / .10 = $64). I’ve not added in transaction costs.

In addition to Darrell’s video listed above, Apex’s own John Skelton is doing live official Nadex Webinars focusing on spreads over the next few weeks, check the calendar on the Apex home page for the schedule. The first one is here:

#4

Thank you very much for the detailed replies! I have printed them out and am studying the math. It is pretty simple when I can see it spelled out like this. This totally explains why I was off in my calculations. I attended John Skelton’s webinar yesterday and had may aha moments, but this one thing was not clear to me. I am definitely attending all of them. Spreads seem really doable, once understood. What I had the most success with yesterday was a spread combo with binaries; IF I felt plugged into the flow of the market. The next hurdle is finding out how to better read the market. Thanks Again! Sherril

#5

Hi Sherril,

Please defer to Gcnishes post and information :slight_smile: My apologies for not seeing that you had just seen a newbie webinar on spreads and launced into how to trend trade them. Also his math was spot on.

Keep up the great questions.

Kellie

#6

Thanks Kellie and have a great day!

#7

Here is another great article that explains US Tech 100 and Nasdaq and the way they tick.