Butterflies and Straddles and Strangles, Oh No! Trading Terminology

S4 - Select - Underlying Markets nadex binaries
1

I just started listening to the TFNN radio show a few days ago. Please explain the following terminology used frequently on the radio show. Include examples, if possible.

  1. Butterfly trade.

  2. Straddle trade.

  3. Strangle trade.

  4. Tick. For a whole point denominated market such as the Dow 30, does one tick = one point? What about fractional point denominated markets such as the US 500, the US Small Cap 200, the US Tech 100, and the commodities markets? In Forex, does one tick = one pip?

  5. Deviation level. How do you determine deviation levels? Can you draw them on the Nadex platform’s underlying indicative charts? Do you use deviation levels as support and resistance levels? How?

Thanks.

2

Great questions and all questions are welcome. Please keep all post to 1 topic. Multiple questions 1 topic ok. But different topics need to be in separate post or it makes it hard to move the post the appropriate area

For 1,2, 3 see forum system

range bound trading - for iron butterflies

straddles we do on spreads

strangles we do on butteflies

details and training in forum - system - section

4 - A tick means a minimum increment move of an instrument - Just as how a cent is the minimum increment move on a stock so a stock ticks in .01

So on the YM this would be 1 - on ES this would be .25 on CL it would be .01 on Gold it would be .1 on NG it would be .001 on EUR/USD it would be .0001

A pip is a synonymous term with tick meaning minimum increment move (threre are also 1/2 pips mini pips where some brokers quote out to the 5th decimal place)

A tick and a point are not necessarily equal it depends on the instrument

See the spread scanner we show the tick size of the underlying and of nadex for spreads

5) Plotting deviation levels I —guess if you wanted to go through a lot of hassle yes you could manually try to draw ever single line on the charts but there i no need we auto plot them into ninjatrader 7 automatically and you an get free futures and forex data and platform. I do not recommend using nadex web based charts for trading. They are great if in a “pinch” but there is really no reason to use them. Limited data, not the underlying itself, limited charting abilities, saving modifying on and on and on. The only thing i use them for is for when it is coming down to the wire on a binary on a premium collection i will use it to see exact price.

There are multiple ways to use the deviation levels, support, resistance, reversal, trailing stops, when to stop adding, i can go on and on and on and on. Like any pivot except they are insanely accurate they are pulled form implied volatility. Feel free to review the links under deviation levels (there is an education link -third link under deviations in the menu) - for more information as it is laid out there where they come from and how they are made. If you have questions about what is there please let me know. There is also a webinar there that is useful for profit targets and more. One other webinar is how i use them for Trailing Stops - this is in the forum under systems - apex elite - 10 minute trailing stops trigger video.

[quote=dennislondon]I just started listening to the TFNN radio show a few days ago. Please explain the following terminology used frequently on the radio show. Include examples, if possible.

  1. Butterfly trade.

  2. Straddle trade.

  3. Strangle trade.

  4. Tick. For a whole point denominated market such as the Dow 30, does one tick = one point? What about fractional point denominated markets such as the US 500, the US Small Cap 200, the US Tech 100, and the commodities markets? In Forex, does one tick = one pip?

  5. Deviation level. How do you determine deviation levels? Can you draw them on the Nadex platform’s underlying indicative charts? Do you use deviation levels as support and resistance levels? How?

Thanks.[/quote]