Hedging NQ

#1

Hi all,

After a year and a half of learning and demo’ing, I’ve finally started trading spreads live (on NADEX). Because of my work schedule, I can only trade from 9:15-10am ET in the mornings, so basically market open. I am a one and done trader who uses a hedging strategy that Darrell often promotes. I want to trade NQ using short term contracts as hedge against my primary position which is a daily contract. However NQ’s shortest spread expiry’s are still generally higher $$ (30-40 range) to get into pre-market than say ES’s and even when the market opens and goes in my direction the hedge ends up eating a lot of my profit. I have to exit the trade by 10am so I can’t normally wait to see if the hedge comes back the other direction. Is there a better way to hedge NQ?

  1. Maybe using ES contracts as a hedge against my primary NQ position since they are cheaper and both Indices are highly correlated?

  2. Maybe doing a 2/1 ratio between my primary and hedge positions? I know it means risking more than putting on a full hedge. I also thought about hedging with Binaries but have since read than its not a good idea.

  3. Put on the primary position first pre-market (9:15-25am ET) and wait as long as possible to put on the hedge if needed?

Anybody like me who trades market open and hedges NQ please advise! Thanks!

@darrell @renzo1

#2
  • These are all great questions and ones that have taken me some years to all resolve doing this strategy live and working with 1000’s of traders. These kind of questions are the very reason I am doing the seminar in Fort Worth :slight_smile:
  • NQ is a higher premium spread. It is not a great contract for mirroring the market especially in current volatility that is so high right now. .
  • Using ES contracts is not an efficient or predictable way to hedge NQ as the beta constantly varies and sometimes massively so your results will be random not consistent.
  • Doing 2:1 will not be effective might as well just do 1 without a hedge.
  • Hedging a directional trade with binaries is useless and not a good idea. I can go into a really long explanation but bottom line it wont help you and will just cause more risk.

  • The longer you wait to put on the hedge if needed (ie market is going against your original position) the more the hedge will cost you therefore defeating its purpose and only making the original problem you are trying to solve worse.

  • I am actually teaching how to master the ultimate hedge strategy and more at the upcoming conference in Fort Worth, TX April 28, 29, and 30th. The course on the site is the basics of the strategy. I will be teaching it live from renewed basics, 2nd level, and mastery as well as trading it live and giving away the profits and $1,000 to one person randomly drawn in the audience.

  • However, there are some definite edges to trading it if you know the proper techniques to learn this you will want to attend the seminar. I will be showing the technique I have learned and used that I have not taught publicly at all on how to hedge NQ. It is very unique from all other instruments in the way the spreads are built
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#5

I’m definitely considering registering for your seminar @darrell. My one question is: will this seminar cover hedging strategies that apply to Nadex only traders (using nadex hedges on nadex directional trades)? I’m not involved in futures or using a combo of Nadex and futures to hedge, I just do Nadex spreads. Thanks!

#6

It will cover all three. It will cover futures traders forex traders and Nadex only traders. 90% of the content is the same across the board despite what trading vehicle you use for directional trading.

One of the specific bonus strategies I will be teaching on NQ is how to hedge an NQ spread with another NQ spread and this bonus strategy is for nadex and primarily for NQ spreads. I haven’t taught this before. It’s is a very cool strategy.

I hope to see you there and meet you in person.

Darrell

#7

I very much would have liked to have attended that event back in April. When I first saw your video presentation that introduced the Ultimate hedge concept using Nadex spreads, I was intrigued to say the least. I was frustrated when I couldn’t find a detailed step by step tutorial on how to implement it. So for me it remained just a concept. Then when I saw an invite to a special exclusive seminar in Texas where you would personally demonstrate this strategy live to all who attended, it was a golden opportunity. But alas I couldn’t make it. My hope is that it’s not the only opportunity there’ll be to get a full grasp of this trade method.

#8

I will be doing a online spread mastery class covering the ultimate hedge soon.

#9

What about live events in upcoming year???

#10

We had one this year and have 1 or 2 planned for next year