Contracts Offered On Nadex have been Ridiculous Lately


#1

I try and do a butterfly with 2 hours until expiration and with 88$ risk on each side and the the ranges are 16 ticks, that’s only 8 ticks of movement that can knock you out. The bad thing for me is i go in and see the contracts for the same expiration except there is only twenty minutes until expiration and with the same total risk or profit potential on both sides together i can get that same 16 tick range with only twenty minutes left, some of them a twelve tick range but a little more profit potential.


#2

Pricing is based on implied volatility. (Aka expected movement)

The lower it is the further the price of an itm or otm will be from $50.

Depending on the bid offer spread and how close you are to 0 or 100 on each side you may not see much of a price change for a while.

The higher it is the closer the price will be from $50

So depending on what that overall markets iv is and what time you try to put on the trade and when it expires the price may be closer to or further away from $50.

Its how all options on all exchanges (cme,nadex,cboe etc) work.

If the iv is off there will be arbitrage and normally its spot on.


#3

Do the expected ranges use implied volatility?

Strike will be closer when implied volatility is low, right? And strikes will be farther apart when it is high?

I was going to ask this on another thread before it was closed: What method does your wife use with her OTM trades you posted about yesterday if you don’t mind me asking? Momentum scalps, 5 min, 20 min binaries?


#4

The expected range uses a proprietary algorithm that calculates the expected ranges for all start and stop times by day of week a week in advance.

Strikes are always the same regardless of iv they are a set distance apart on every market as defined in the contract specs.

99% of her trades are 5 min binary contracts using tc. She has her specific line up (pitch) she likes, records stats every week and updates what pitches she will take each week accordingly. Basically she has her way of choosing which ones she will take and wont and she updates it every week. Before asking …know she is a retired teacher… so shes not looking to get back into teaching :). She doesnt think about her trades whike happening. Setup execute done next trade never looking back. Wins losses etc she lets it take care of itself end of day no time to focus on why this why that or she would miss trades. Insanely disciplined.


#5

That is insanely disciplined!

So volatility just effects the price ladder?

Also i was wondering if you think it would be worth it to put previous days high and low on the chart?


#6

Iv impacts all options proce it has no impact on the strike ladder.

Previous days high and low can be helpful just dont go overboard on line drawing.


#7

If you end up coming out with another educational course i think it would be nice to have it be about reading price action on a naked chart and how to apply that knowledge with the indicators.


#8

We have new education constantly and I discuss price action throughout a variety of videos and courses we offer, in most of them actually. At first you may only see “rules” but overtime you will learn and you will see the price actiom and reasoning behind them. This is referred to as chart time and it takes a long time to learn to do this on naked charts.

To start this backwards as you are suggesting (naked charts) would take literally years for one to learn (and profit). Having taught 10s of thousands of traders I have learned that guidance is needed and that is why tools where and are constantly being made. Thats why the tools exist to expedite the learning proces. So to do this and not make it takes years of trial and error and expensive coaching we choose the faster easier and more effective method. We have traders that have traded for years without success before coming to Apex and literally within weeks are able to come on and become profitable traders.

So price action is constantly being taught even if you don’t relaize it (yet). I use a variety of customized indicators which are based within price action. Thats why I use customized price based bars, velocity and timers, expected volume, expected ranges, deviations, the APEX pattern, magnet levels, and how to use trend catcher with chop filter and mvp to trend or trail and how to take slingshot and elevator entriies based on specific price action patterns.

Price action using the above is what your learning by doing these trades. The whole point of the tools is to make price action easier to read and combining it with a defined system on how to trade and take advantage of said price action on a consistent basis.

The more you master them the more your mind will be able to relax and the more you will be able to confidently read price action and along the way the tools are helping you learn how to do this.

And when the light bulb clicks you will own it, you will see it, and your confidence will be on a solid foundation. Lori is one of many excellent examples who has leaned to read the price action by mastering the use of the tools so her mind could relax and see threm as she began to see not only what was being taught but why it actually worked. Price action is way beyond if a and b and c then d its learning the pulse of the market and you need tools to help you survive long enough, that are based on price action, to allow your mind through chart time to learn to see that price action.

Not sure how much that helps or satisfies what your looking for buy its the most accurate and realistic reply I can give you on learning price action.


#9

Thank you. As you know from past posts i really sucked at 5 and 20 minute binaries before i stopped trading them. But, Friday after the market closed i looked at a binarty3tick or whatever you call it template and i noticed if you only take the trades with the trend catcher that are at or around the entry bar from the apex pattern and there is reasonable space between the a and the p it wins more often. It would limit a lot of good trading opportunities though…


#10

Darrell i was thinking for those days when your time is limited do you have any daily binary strategies or system? I was thinking something that has a history of closing in the direction you thought it would based on something like at least 60% of the time. So off this we can do a daily ATM contract and do this daily without taking much time when we don’t have it.


#11

As someone who prefers swing trading over intraday trading, I would love to see a little more on systems or strategies that fall under that style of trading.

dgaubatz, I’m sure with limited time you could squeeze in a few 5min binary trades. Depending on your available time of day and amount of time, etc.


#12

Swing and intraday are the same thing just more bars in less time. Swing is just trading trend and reversals. Whether it be intraday or daily. Daily just means larger bars larger rism. More time more economic events impact things making proce action harder to read… I can teach these systems but again more risk and not really going to make more money as missing all the intraday movement. Regarding daily atm > 60% that is what the core signals are but your not going to make the money you want to make. That is simply a getting started basis. If you prefer swing trading etc more than 5s and 20s then focus on spreads using tc chop filter, slingshot, and elevator entries. A lot of traders have challenges on binaries and as i have said for years bunaries are easier to learn and harder to trade. Spreads seem hard to learn but are incredibly simple to trade as i show on how to trade spreads on trend catcher. People just want the action so they want those fast binaries… which are awesome and can be great but its a love or hate thing (1s and 0s). However what i can tell you is i have very few spread traders that ever complain. (Strong hint).


#13

I used to think ALL binary prices were affected by start-to-close… Like if you do a butterfly on a daily contract with 12 hours to go, you can get really wide strikes. That’s true… but if you do this on a 20 minute contract, they don’t consider the fact that the contract just started. Their prices will coincide with all other contracts that expire at the exact same time. I was so disappointed when I discovered that. I figured I could have my longer term ITM binary expiring at (for example) 2pm, and then get a super amazing OTM inside of it on a 20-minute binary that also expires at 2pm. Nope! It doesn’t matter if you’re getting in at 1:40pm (very beginning of the 20-minute contract)- it’ll have the same pricing model as the longer term ones expiring at the same time.