Analyze my Momentum Trade using a Binary on Nadex

#1

Here is a trade I took on Gold late at night.

I entered a binary long position on Nadex Gold>1307 with an expiry of 1:30 PM for a price of $52.50. My target was to exit trade if I lose $20 and take at a profit at $72.

I exited the trade selling at $61 for a small profit of $8.50, not much, but WOHOO! my first profitable trade.

My questions with my chart below:

  1. Was this the right strategy?
  2. Should I even have taken the trade since I was about to hit the top of the expected range for the hour? (as the chart shows, it eventually broke out of the expected channel)
  3. What about my exit, should I have exited once the bar turned color? Or was I one bar late when it had hit the MVP line?
  4. Would a Spread have been more profitable?

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#2

Congrats on your profitable trade!! :slight_smile: We do not do Spreads on Momentum Scalps since we are really just looking for a short quick move. Spreads are not the best instrument for Momentum scalps. We use either futures or Nadex Binaries. Looks like you took a good entry on the Exceeding Volume. As far as your stop, I usually move the stop up every bar to the low of the previous bar. So I would have probably exited one bar earlier. But good job on exiting when you did and having a profitable trade!

#3

Thanks for your comments…Yes I have since switched to only using binaries for Momentum Scalps.

In regards to my entry, since it was at the top of the expected range, would you have took that trade or waited for it to close above with exceeding volume?

#4

Since it closed outside of the range with expected volume, yes I would have taken it. If it was a bar right before the range I may have waited, but it was a good entry :slight_smile:

#5

This is what is known as a momentum breakout trade or a P3 trade on boomerang. Look up those two strategies videos in the elite bonus and boomerang courses. Your trade was text book for them.

Note with gold bid/ask being so narrow lately (so long as you chose one that was ATM meaning within a few ticks) you could use gold contracts for momentum scalps. The thing is you need a fast moving contract like a binary - or a tight bid/ask fast moving contract like a ATM gold spread with 1-3 tick bid offer spread or actual gold futures.