BMX Entry Filter using binaries, I'm missing something here

S12 - Survey - Evaluate Trading Performance what did i do wrong that i should not repeat?
1

Hi,

It appears as though I found a knack for entering ITM binaries just before a BMX, only to get stopped out for a small loss. I’m sure there is a detail I am missing but I can’t quite pick it out, and I would love to know if you can see what I am doing wrong.

Example of my approach, ride-along explanation: I trade deepish ITM binaries, usually with as much price action as I can get my hands on. Powerline entry confirmed. E bar breakout entry confirmed (entering on the 4th tick to be sure it broke past the 3 ticks required). It is at this point that all looks well, I’m in the trade, I see a couple bars go by in the intended direction and then see a reverse in BMX and exiting for a small loss.

I’ve watched the BMX entry filter video again, but I am still missing something. I’ve attached a photo from a trade I did today. Entry at 15394 (light blue dotted line, circle is my price of the binary sold for around $30). The two lower blue lines are the BMX range. You can see the 2nd bar after my entry touches BMX zone, but forms a range back to just about strike price exit. The line hasn’t even completed to see if it will break past the BMX zone, yet I’m getting stopped out. What is further frustrating to see is that the binary would have expired profitable if I hadn’t have exited.

I do not want to form bad habits, and though I stick to the rules as I know them, I fear I’m doing something wrong there. Luckily the exit rules have saved the bulk of my money in these trades, but I’ve had 4 trades in a row loose today for around $30-$40 each, which adds up quickly. Can you see what I am forgetting here?

Any help would be much appreciated.

Thanks,

Rob

2

[quote=doppelrock]Hi,

It appears as though I found a knack for entering ITM binaries just before a BMX, only to get stopped out for a small loss. I’m sure there is a detail I am missing but I can’t quite pick it out, and I would love to know if you can see what I am doing wrong.

Example of my approach, ride-along explanation: I trade deepish ITM binaries, usually with as much price action as I can get my hands on. Powerline entry confirmed. E bar breakout entry confirmed (entering on the 4th tick to be sure it broke past the 3 ticks required). It is at this point that all looks well, I’m in the trade, I see a couple bars go by in the intended direction and then see a reverse in BMX and exiting for a small loss.

I’ve watched the BMX entry filter video again, but I am still missing something. I’ve attached a photo from a trade I did today. Entry at 15394 (light blue dotted line, circle is my price of the binary sold for around $30). The two lower blue lines are the BMX range. You can see the 2nd bar after my entry touches BMX zone, but forms a range back to just about strike price exit. The line hasn’t even completed to see if it will break past the BMX zone, yet I’m getting stopped out. What is further frustrating to see is that the binary would have expired profitable if I hadn’t have exited.

I do not want to form bad habits, and though I stick to the rules as I know them, I fear I’m doing something wrong there. Luckily the exit rules have saved the bulk of my money in these trades, but I’ve had 4 trades in a row loose today for around $30-$40 each, which adds up quickly. Can you see what I am forgetting here?

Any help would be much appreciated.

Thanks,

Rob [/quote]

It looks like you’re following the rules correctly. I am trying to refine the apex pattern with ITM binary trading myself for the best results. I try to find a strike near the high of the E at least, although I prefer the p bar or higher if possible on a short…low of the e or p on a long. You may have to give it a little more time(aka further out binary) to get your desired strike price. I can tell you from personal experience more times than not, exits when it hits your strike save you from further losses. I feel your pain in losing a few in a row like that, as it does add up. The problem I have is sometimes I get into one of these trades for $14 potential profit only to have the underlying hit my strike right near expiration, which sometimes would mean exiting at $65-75.(not a desired r:r at all for me). I don’t know that there is really a way to know when the market will form a BMX when entering a trade(although I remember Darby mentioning something about having an idea when it will)…I just try to watch all 4 indices, broad market index, and noise to try and get an idea. I could be wrong, but it looks like you’re doing things right…if I’m wrong someone please correct me.

3

Thanks for the feedback ffpm03 - I’ll keep that in mind and definitely look to get more price action on these trades. Have a good one!

4

Can you provide the full scren date instrument time stamp at bottom etc… will make it easier to analyze. Don’t forget BMX Exit is OPTIONAL - the filter is not optional but the EXIT IS OPTIONAL

The BMX needs the 3 up closes (2 after bmx bar) this one has 2 upcloses (1 after bmx bar) followed by a down close. In this case you would simply trail your stop to the high of the 3rd bar versus just exit as the momentum is going in your favor.

This would be even more important on the DOW as it is not near as volatile as say oil/gold etc…

You mention 15394 so assuming dow - i usually use 3 ticks not 4 on this - but whatever is working best for you so long as its consistent.

I’m guessing you exited as it hit your strike? if so your strike is WAY to close you need a further out strike - close to the P or even the 5 ticks if possible. This may require more time to expiration to a strike with a decent distance. Not sure how far to expiration you where choosing. But just think about on Elite how we do expect it to be highly possible that it move up/down that is why we set the stop it so far away.

Sort of going out on a limb here but i think the binary strike selection is the biggest issue here not the BMX or the entries. If you got a further out strike with say 30 min to 3 hours to expiration for around $20 to $25 premium you should be good. and it will devalue fast with movement in your direction ideally $25 or more so you can exit at around $5.00 versus having to wait until expiration.

While “demo” learning this do a variety of strikes try to manage a few of them and see what works out and why this will help you quickly see the benefits of time/premium and distance on binary strike selection.

Also FOCUS on a market - (one of the biggest mistakes i see is traders hopping around to much) you can trade 1,2,3,4, 8 or 10 markets. But if you are take every trade on those markets (exception - ie indices you focus on one - ie TF or YM - but may switch to another indice if say everything is short (broad market choppy market bmx on other indices etc… )and the one you are in is hanging out long forever).

Let me know how this helps.

Darrell

[quote=doppelrock]Hi,

It appears as though I found a knack for entering ITM binaries just before a BMX, only to get stopped out for a small loss. I’m sure there is a detail I am missing but I can’t quite pick it out, and I would love to know if you can see what I am doing wrong.

Example of my approach, ride-along explanation: I trade deepish ITM binaries, usually with as much price action as I can get my hands on. Powerline entry confirmed. E bar breakout entry confirmed (entering on the 4th tick to be sure it broke past the 3 ticks required). It is at this point that all looks well, I’m in the trade, I see a couple bars go by in the intended direction and then see a reverse in BMX and exiting for a small loss.

I’ve watched the BMX entry filter video again, but I am still missing something. I’ve attached a photo from a trade I did today. Entry at 15394 (light blue dotted line, circle is my price of the binary sold for around $30). The two lower blue lines are the BMX range. You can see the 2nd bar after my entry touches BMX zone, but forms a range back to just about strike price exit. The line hasn’t even completed to see if it will break past the BMX zone, yet I’m getting stopped out. What is further frustrating to see is that the binary would have expired profitable if I hadn’t have exited.

I do not want to form bad habits, and though I stick to the rules as I know them, I fear I’m doing something wrong there. Luckily the exit rules have saved the bulk of my money in these trades, but I’ve had 4 trades in a row loose today for around $30-$40 each, which adds up quickly. Can you see what I am forgetting here?

Any help would be much appreciated.

Thanks,

Rob [/quote]

5

Hi DM,

Just now seeing this reply, thanks for taking the time / sharing insight! This post was from a while ago, so looking at my shot there isnt much info there to work with, full screens are a must from now on, lol. Sorry about that but thanks for digging into it.

So yeah, I didnt know BMX exit was optional, good detail there. I’ll see how it affects my trades using the stop method you mentioned, and have modified my notes accordingly.

I do know this was a binary with a strike price exit, probably bought too close. Those +$50ish binaries are so just much more tempting if an apex has lined up to support it, but I typically have it bounce back around and kick me out on strike exit rule, which gets very frustrating.

I’m narrowed down to only a couple instruments I focus on, this was a challenge in the beginning but I’ve found the right balance of opportunity/focus for the time being - good advice though as in the beginning I wouldnt stray from just one instrument. Apex is the core, knowing which instruments “pace” well for me took some time for me.

Thanks again!

Rob

6

Don’t use the 50/binaries

You can manage stops and you aren’t maximizing the time decay and they are to close this is totally against what i teach for the apex strategy on elite with binaries :slight_smile: Trust me first thing i did was try OTM then ATM and found ITM money easiest to manage and highest probability. The most you can make is 50 at expiration if you hold it and 50 at risk with only a simple tick against you. Deeper ITM you can lower with the ATM strike exit rule and gives you distance to let time and direction both work for you.