Finer points of Nadex 20 minute binary Stra


#1

Hello,

I have been reviewing the webinar “Nadex Binary Strangles on 20 minute contracts.” While I think I understand the jist of the theory I have some questions about certain specific aspects:

  1. What is the theory behind expected volume?

  2. How exactly is expected range used in making trading decisions for 20 minute binary strangles

  3. What news events are good for 20 minute Binary Strangles on Nadex?

I would greatly appreciate any thoughts on these matters.

Thanks

Thanks


#2

I would not recommend news for strangles on 20 min binaries. With expected volume we are looking for the volume over the last few 20 min periods to NOT be exceeding the expectations, indicating a flat market.

We are looking for the market to stay within the expected ranges and not be breaking outside of them. The market breaking outside the ranges would indicate a volatile / moving market. We are not wanting the market to be moving a lot for strangles


#3

I just watched the video also.

I wouldn’t trade news with 20-minute binaries, either. However, I am going to direct you to a very basic article on strangles. Strangles are the opposite of butterflies in binaries and traded the same as straddles on spreads. My understanding is that they do need to be exceeding the expected volume. You can use a strangle on a binary for a news event in a similar way that you would use a straddle for a spread.

If you look at our news calendar, that is usually how it is recommended i.e., straddle/strangle. There are two that are recommended every week: the Oil Inventory report on Wednesday and the Natural Gas report on Thursday.

To try to answer your questions:

  1. The theory is that the current volume is either higher or lower than the historical volume. See expected volume indicator forum posts.
  2. Expected range is used in making trading decisions by giving you an upper and lower range for that 20-minute time period. For a strangle, the theory would be to buy a binary at the top of the range and sell a binary at the bottom of the range and as the volume pushed the market up or down, it would get closer or exceed the range and you would make more profit than what was risked on the trade. You are expecting to lose on one side, but the winning side will make enough profit to cover the losing side.
  3. We don’t usually use 20-minute binary options for news events as they need more time to make their moves. Hopefully, this doesn’t further confuse you!

#4

With strangles, we want the price to move far one way or the other. Bring on the volatility & volume! Butterflies are for flat markets.