5 Minute Butterflies and EPC Revamped

#1

I will share the strategy I have been using for the past week or so with great success. Everything listed below is how I have been trading it.

Chart Setup:

  1. One minute candles

  2. Expected Range

  3. Expected Range 2

  4. Clarity Price

  5. Deviation Levels set to default

  6. Expected Volume set to default

  7. Trend Catcher

  8. VolumeUpDown

When you are done your chart should look something like this:

So the strategy is very simple: I am looking to take trades at the bottom/top of the market within each 5 minutes.

So the first thing I do is I draw a line at the very first level on the VolumeUpDown indie

This level will have to be adjusted constantly. I usually keep it at the first level but if I am constantly getting large volume bars I will move the line up to the next level.

While watching the charts the first thing I am looking for is for trend catcher not to match the VolumeUpDown bar

Next, if I am trading conservatively, I want to see the candle to be around the top/bottom of the high/low box

I then want to see the VolumeUpDown bar break through the level I have drawn

Once these three conditions are met I will take a trade in the direction of the VolumeUpDown bar. If I am trading conservatively I will find the deepest itm strike I can below/above the candle. More aggressive, I will take a strike at the high/low of this candle. I NEVER take a strike inside the candle unless the market is really moving away with volume breaking the expected levels and trend catcher changing direction.

My entry will usually take place on the open of the next candle. However, if I am close to the end of the signal candle and it isn’t really moving enough to change volume direction I will enter then…the latter is more aggressive.

I take each trade to expiry and I set my stop trigger at my entry strike.

Max buy is $85 Max sell is $15

With this being said, there are so many setups that I rarely will go above/below $80/20 and sometimes can get in at $70/30.

Well that is it in a nutshell. Please post your questions and I will try to answer them to the best of my ability and as soon as possible.

I usually post my trades in the Nadex chat room on a daily basis.

Almost forgot…the butterfly setup…ha

I follow the same rules listed above for the first leg. What I am looking for in the second leg is a slow down of the market, low volume, and a far away strike or another reversal of volume, this time coming against me.

Happy Trading!

Just realized I forgot to mention one thing. The candle that you want volume to go against, this candle needs movement in favor of volume. Doji candles with no wicks are unacceptable. You want to see that the market is actually pushing against TC. Long wicks are what you are after.

#2

This looks like great work. I’m not sure if it is possible, but this type of system would be much clearer if a couple of trades could be captured live in a video along with the Nadex price ladders you are choosing. Thanks for sharing - Bob

#3

Hey Bayport,

I will do this for you once I get a trading computer. Currently I am using two computers to trade with. I have my chart on one computer and my scanner on another so I would not be able to produce a video showing both…or at least I have no idea how.

#4

Greg

Great work and thank you for sharing! I was blown away earlier today watching trade after trade after trade like a machine, I have been looking for a method to fit my style and this might be what I was after. Thanks for your help

#5

Any time Zentrader

#6

This is really interesting work!! I was wondering, what times did you find work best for EPC’s and butterflies on the 5 min binaries using this? My guess would be after lunch, but just a guess. What do you find is the most lucrative? Also, does this work better on some instruments than on others?

Awesome work!! Josh

#7

Hey Yoshi54, I have only tested this on the eur/usd. I have tested this strat from 6a.m. all the way up to 10p.m…yes I know, I don’t have a life…lol. I was able to find trades throughout this time. Of course for butterflies, it is best to do them during lunch and during really slow times such as afternoons and evening. I will say this, no one should have any problems finding trades. I have been casually trading this strat while doing a million other things around the house and I am easily getting 40+ trades per day. EPC, is what I trade the most and those things are everywhere.

Thanks,

Greg

#8

Wish i could understand more than half of what you’re saying! Lol, i’m to inexperienced to understand what’s happening here. Book marking this post though, cause from what i can discern, it looks very analytical and well founded.

#9

IHeartDrummin,

Ask questions, ask questions, ask questions, ask questions, ask questions, ask questions, ask questions, ask questions, ask questions, ask questions, ask questions, ask questions!

Get my point? You won’t learn if you don’t ask questions.

Thanks,

Greg

#10

Speaking of asking questions, have you figured out a long term win/loss average for this one? looks like the risk is about 25-30, with the reward being close to the same, so that is really good from that perspective!!

#11

Great Powers of Deduction to get this figured out Greg.

Played with EU (Today) myself,but without the Vol-Up Dwn indicator. Using your prior posted setup. Actually the action wasn’t as crazy as I thought. it might be.

The win Ratio was crazy and most losses were my own fault. I had 1 leg in when the Greece news hit. Even though the charts went nuts…I won.

I will definitely add this to my golf bag of clubs.

Thank you for the good work. Craig

#12

Greg,

Thanks for being willing to help newbies to Binary methods. Hopefully you dont mind if my questions are kind of basic but I have done the course and researched quite a bit. Can you explain if your entry is normally around 80 for longs, does that mean your risking an 80.00 potential loss to make 20? I also think i understood you do alot of one legged Butterflies is that correct and if so what do you notice that helps you determine to go with one leg or impliment the full butterfly? Thanks

#13

Greg,

Can you look at this screencast and explain the trades you took and why etc. First if you dont mind when you post a number like this chart $81, $67 $83, are these how much you actually profited on the trade or is that counting your ITM price? also i notice on yourfirst 81.00 trade you entered a long when the trend catcher was red and so was the up down vol bar but your system said the up down bar was opposite so im confused with that. Also you did the same type of entry on the 17.50 trade you went short but both tc and up down vol were green.

#14

Howdy Zentrader,

I never mind answering questions if I am able. I actually have two methods for finding EPCs and butterflies. There is my original post and then there is this post. Both methods work really well. Now, on the first method I was really focused on butterflies. Every trade attempt I took was seeking a butterfly. However, I quickly learned that about 70% of the trades I took were EPC or directional trades…whatever you want to call them. In other words, I was only able to get the trend catcher leg. I am extremely picky when it comes to trading, so if I cannot get the strike I want I just don’t take it. So there were a lot of trades that I was able to enter on the tc leg but the counter trend leg just didn’t setup the way I liked. For this method my risk/reward was usually around $80-85/$20-15. Now I have several factors I take into account when determining whether or not to enter into the second leg. One, where is the second leg within the high/low box. I usually want to see it near the edges getting ready to pull back or I want to see very little candle movement. I also want to see low volume. NEVER TRADE BLIND!!! This has become my motto. I don’t care what system you trade. If you don’t know what is going on in the market that system is going to fail. What do I mean by this? Ex. If I am looking to take the second leg I want to look at the recent history to see what is going on. Are we in a trend? Are we in a huge volume move? Are the deviation levels near by that the market might bounce off of or move to? Is news coming out? These are all things that you need to consider before trying to implement ANY strategy especially butterflies. Hopefully my rant has answered your question.

Thanks,

Greg

#15

Greg,

Thank you for sharing your methods, it’s been a great help. I was spending a little while in demo tonight testing this out and did pretty well.

I tested a couple different binaries trying it out, I even managed to get a few more winners after taking the screen capture. I still want to do a bit more demo trading before jumping in live, but your explanations really helped to see what to look for.

Jim

#16

Hello again Zentrader,

Okay, the chart you are posting is my second method for finding butterflies and EPC trades. This method is trying to find the peaks and valleys within a 5 minute expiry. The prices you see on the chart depend on whether or not it was a buy or sell. If it was a buy, then the price listed was what I paid. If it was a sell, then the price listed is what I earned. Now regarding my trading “style”, I have become very aggressive with these and I am taking trades with less volume and within the close to close. When I first started trading this method I obviously was not doing this. I followed the rules that are posted on this thread. My confidence has grown and I haven’t had issues with this so I will probably continue. Now, with this method you are trading against the trend catcher. What you are actually looking for is a change in volume which generally means a change in direction, at least temporarily. Regarding the trades you asked about. I apologize but I believe both of those arrows are meant to be on the candles next to them. 5 minutes are really fast and I try to rush as quick as I can to mark my charts and get them posted in the chat room so I can continue to look for trades. I often make errors because of this. I assure you the rules were followed when I took the trades. Hopefully this answers your questions.

Thanks,

Greg

#17

Howdy Jim,

Thanks for the post. Demo, demo, demo, demo! I am glad you are getting it. I would recommend you demo this thing until it becomes second nature. TRUST me, when you go live with these 5 minute trades you will second guess everything. YOU NEED TO BE CONFIDENT IN YOUR TRADING BEFORE GOING LIVE!!! I am usually in the chat room most of the day and you can always drop in and trade with us and ask a billion questions. There are really great traders in there that know their stuff. Ask questions, ask questions, ask questions.

#18

Sorry man, I just thought I would repost, figured with all the other questions, it might have been missed!! 8^) Josh

#19

Hey Yoshi,

Sorry for missing your question. This would be very subjective but blindly taking every setup over the last 20 trading days the win percentage is 81% accurate.

Thanks,

Greg

#20

Is that 81% the directional EPC trades or the butterflies?

And I understanding you’re risking $80 - $85 (let’s say average $82.50) to profit $15 - $20 (let’s say average $17.50)? Is that correct?