Spread Scanner help needed please ( Proximity and Risk )

#1

These may be rookie questions, but I am in need of some help, in making sure I understand and am grasping the following questions correctly :smile:

Proximity and Risk

Using a few examples ( taken from today … 7-27-2015 ) :

TF had the following Proximities and Risk … 5 ( proximity ) and -132 ( Risk ) -20 and -157 -15 and -126

YM had the following Proximities and Risk … 1 ( proximity ) and -61 ( Risk ) -7 and -75
8 and -39

CL had the following Proximities and Risk … 3 and -45 -7 and -17

ES had the following Proximities and Risk … 18 and -13 4 and -49

NQ had the following Proximities and Risk … -34 and -72 11 and -48

GC had the following Proximities and Risk … -2 and -134 40 and -6

ZC had the following Proximities and Risk … 14 and -81 -9 and -339

Those of course aren’t all of the available markets ( SI, NG, HG, ZS , FTSE, DAX, NKD and all of the Forex pairs ) What I am confused about are the following…

  1. What does it mean , when a spread’s Proximity has a minus sign in front of it and another spread does Not have a minus sign ( assuming both are Bullish/Long spreads ) ?

  2. What are the Equivalences for each Markets Proximity and Risk ? Meaning … when we see a -6 or 6 proximity for a spread on YM and we see the same -6 or 6 for a spread on CL or ZC … what do these 6’s translate to, in terms of that Indicatives " Actual " point value ?

For CL and a proximity of 6 , does that mean … .06 cents on the indicative ( $60 ) , and so 6 ticks ? For ES and a proximity of 13 , does that mean … 13 ticks ( $162.50 ) or does it mean 13 points ( $650 ) For ZC and a proximity of 158 , does that mean … .158 ticks ( $790 )

  1. On one of the webinars I was watching this weekend , it was mentioned that 3 of the Markets ( SI, HG and NQ ) had point values / equivalencies to their spreads , that moved slower / less than that of each one’s Indicative. So if SI moved up .50 cents on the Futures market and you bought 50 Nadex spreads ( to match 1 contract on SI ) , that you would still NOT make a 1:1 PnL for each tick / point that SI moves ?

So with these 3 markets , how can we convert what a 1 tick move in the Indicative equals on these 3 markets … ( SI, HG and NQ ) ?

Hopefully my question makes sense :slight_smile:

Thank you for all of the help, I feel like I’m getting t and understanding the Spreads, just have a few things I want to confirm and make sure I understand in there entirety

#2

Good questions but I would recommend taking a screenshot using jing or the snipping tool and mark up the parts of the scanner that you have questions about. This would allow someone to respond using that screenshot as a reference. Be sure to get a shot of the entire scanner. If you haven’t used those tools before just do a forum search for jing, it’s pretty a pretty easy tool to use.

#3

wmiller561, Thank you for your reply

I have attached some charts , showing the Actual Proximity and it’s associated Max Risk/Profit

I guess that my question boils down to … Taking the US Tech 100 ( NQ ) and it’s ( Proximity ) of -56 and ( Max Risk ) of -91 So in this Example … NQ would have to move 14 points ( The actual NQ Futures contract ) ? And so… -56 divided by 4 = 14 points ) ? And the Max Risk of -91 = a Risk of $91 per ( 1 Nadex Contract ) ?

Another Example … ZC ( Corn ) shows a ( Proximity ) of 14 and a ( Max Risk ) of -119 So in this Example… ZC would have to move .014 cents ( The actual ZC Futures contract ) OR would ZC have to move .0014 or is it .14 cents ( The actual ZC Futures contract ) ? And the Max Risk of -119 = a Risk of $191 per ( 1 Nadex Contract )?

Silver ( SI ) example … SI showing a ( Proximity ) of 9 and a ( Max Risk ) of -39 So SI would have to move .009 cents ( The actual SI Futures contract ) ? And the Max Risk of -39 = a Risk of $39 per ( 1 Nadex Contract )?

Just trying to make sure I understand the " Actual " Needed move in the Underlying Futures contract itself , before I’d cover the Proximity Level/move.

Thanks so much, I really appreciate any and all help and input on the forementioned questions Thanks - Michael

#4

I believe that the old scanner uses the Nadex tick size in showing proximity so your US Tech example would be 56 x .1 = 5.6 points.
If the contract expired at the exact same price you would lose $56 of the $91 risk. The new scanner shows proximity in terms of the underlying market ( in this case .25). If I’m not mistaken, the old scanner also used the bid/offer of a futures contract compared to the spread prices to determine the proximity and the new scanner compares it to the Nadex indicative.

If I’m wrong about these details someone please correct me.

Here is a screenshot comparing the two scanners.

#5

wmiller561, Thank you again for your reply and for posting the comparison of the older scanner to the new scanner , and the differences in how the two of their " Proximities " are calculated

I want to share with you how I interpret the proximities, and make sure that I am doing the calculations on them correctly please…

Using the Older version Spread Scanner … you just take the number that is listen under the Proximity and multiply that number by .1 ( No matter what market you are looking at correct ) ? So whether it’s ES and NQ, GC , CL, YM or ZS that has say a 10 as it’s proximity … each of these symbols Proximities = 1 Point ( on the Underlying Futures market of each of them ) ?

ES and NQ …OLD SCANNER this would mean that a 1 point move is needed ( 10 x .1 ) , which you are just moving the decimal one place over to the right ? NEW SCANNER this would be 2.5 points ( 10 divided 4 = 2.5 )

So for Gold … OLD SCANNER this would mean that a .10 cent move is needed ( 10 x .01 ) , which you are just moving the decimal 2 places over to the right …since GC trades in hundreths ? NEW SCANNER this would calculated by … taking the 10 and dividing it by GC’s Point Value of $100 = .10 ?

For CL … OLD SCANNER this would be a .01 cent move that is needed ( 10 x .001 ) , since CL trades in thousandths ? NEW SCANNER this would be calculated by … taking the 10 and dividing it by CL’s Point Value of $1,000 = .01 ?

For YM … OLD SCANNER and NEW SCANNER this would mean that a 10 point move is needed 10 x 1 ) , since each point on YM is just that , 1 point … 1 to 1 via the Nadex contract and the YM future contract itself ?

For ZC … OLD SCANNER this would mean that a .05 cent move is needed ( 10 x .005 ), since ZC trades in thousands ? NEW SCANNER this would be calculated by … taking the 10 and dividing it by ZC’s Point Value of $5,000 = .05 ?

I hope that my question makes sense :smile:

I want to make sure, that I understand the exact point and ticks that each Future has to move via the proximity, so I can know that If I enter a trade and the 1 standard deviation level and or that days ADR-high price level are 5 points above my entry … if the proximity allows for me to make a profit , or if there’s just to much proximity to " Overcome " and therefore… it’s not worth me even placing the trade.

An example would be: I get an entry to go long on NQ , and the ADR-HIGH and 1 standard deviation level are both 10 points above, from the point that I enter the trade ( so a likely point in which the trade would stop from going any higher ). I enter the trade, and have my stop at 5 points below my entry , and I always want to have a good likeliehood of making 2 -3 times my risk ( which would be a profit target of 10 - 15 points )

So, if I then go and look over at the spreads, I can automatically disregard those with Proximities of … 75 - 100 ( on the Old scanner ) OR 30 - 40 ( on the New scanner ). As this would not allow me to have a chance of making a profit of " at least " twice what I’m risking on the trade ( due to where I placed my stop on the actual NQ Future chart )… there is just to much in terms of proximity for the spread to overcome , before I’d start to make a profit.

Hopefully my question(s) and examples make since, and can also help others who may have been wondering the same thing

Thanks so much - Michael

#6

Hey Michael, great questions! Lots to answer :smile:

A couple things here:

  1. I would suggest you watch this video course here- The Ins and Outs of Nadex Spreads, it will answer almost all of your questions above and really help you understand Spreads: Webinar- The In's and Out's of Nadex Spreads

  2. I would no longer use the old Spread Scanner, if you are looking to understand and trade Spreads the new scanner is the only way to go, it is awesome. Here is a link with step by step training on how to use the new scanner: Pro Spread Scanner Step By Step Training

#7

Yes the videos are a definite must do.

A couple of things about your post, not all Nadex instruments have a tick size of 0.1 Some are the same as the underlying market, some are not. You can see the differences on the old scanner (probably other areas as well). This pic shows most of the Nadex instruments.

Also, it sounds like you’re most interested in finding the spreads with the least premium to overcome. This will usually be the middle spread or the daily spread (increased upfront cost).

Hope that helps.

#8

skeltonmarkand wmiller561 , I really appreciate both of your replies

I will re-watch these videos again ( as it seems that I could for sure use a refresher )

wmiller561, I think this is exactly what I have been looking for :smile:

If I understand it correctly … The Proximity ( on the New Scanner ) lists each Future, in Ticks So , if I see a 20 under the proximity on a spread for CL , then that 20 represents a .20 cent move " Needed " in CL before we’d start to " Mirror " the market ( The underlying ) ? And if the proximity was a 150 on a CL spread , then that means that CL will have to move $1.50 before we begin to " Mirror " the Market ( The underlying )

ES … proximity of 8 = a 2 point move needed in the underlying before the spread begins to mirror it GC … proximity of 37 = a $3.70 move is needed in the underlying before the spread begins to mirror it SI … proximity of 15 = a .15 cent move is needed in the underlying before the spread begins to mirror it ZC … proximity of 7 = a .07 cent move is needed in the underlying before the spread begins to mirror it

I hope I am converting these correctly ?

If I can get each markets correct way to convert them … then this should help me to quickly assess the needed move in the spread ( for it to begin to mirror the underlying market ) , and I can determine if the move needed fits my ADR profit target range(s)

Thank you again for all of the contributions and help to my questions on this thread Really appreciate it - Michael