At approximately 8:15 this morning I place a Straddle on the 10am spreads
Buying the .3610-.3710 contract at a price of .3624 risking $14 and
Selling the .3510-3610 contract at a price of .3598 risking $12.
I ended up closing my position on the SELL side at a price of .3566 for a $32 profit and
the BUY side expired OTM losing $14 for a net profit of $18.
My max risk was well under the recommended $45 and I believe I could have cashed out at .3554 or a bit lower (can’t remember how low it got) at one point or around there taking more profit.
I feel I did something incorrect as the market moved about 84 pips just to make $18?
On the 1:1 ratio, based off the total risk shouldn’t I have had a target of $26 or something different?
Thanks for your help
10 or 11 or 3 - futher the better if not much more expenseive
Assuming the market was right at 1.3611 at 8:15
Buying the .3610-.3710 contract at a price of .3624 risking $14 and Proximity was 14 (premium was 13 ticks with 1 intrinsic value)
Selling the .3510-3610 contract at a price of .3598 risking $12. Proximity was 12
Total risk was 14+12 for 36
To make 1 to 1 you need to make total risk on other side
so total risk was 36 need to make 36 + risk on the other side (market went down) so 36 + 14 (long side/other side) for total of 40 ticks profit needed
To make 40 ticks profit you need to buy back 40 ticks under where you sold it
You sold at 1.3598 40 ticks lower is 1.3558 for a buy back price netting a 36 profit (after the 14 loss on long side if the market where to not go back up etc…)
Market being at 1.3611 and taking profit at 1.3558 is approximately a 53 tick move for the forex market
Assume you have say a 3 tick breakeven distance and a 4 tick bid ask spread to get the spread fill at 1.3558 the eur/usd would need to be 7 ticks lower - 1.3551
Distance from underlying at 1.3611-1.3551 = 60 ticks is about where you should have easily been filled
The market did move up to 1.6362 before pulling back down so from the high to go from 1.3632 down to 1.3551 is about 81 pips from high to exit - but not from entry to exit - entry to exit would have been about 60 pips. So the market did not have to move 80 to make a 1 to 1
Buying the .3610-.3710 contract at a price of .3624 risking $14 and
Selling the .3510-3610 contract at a price of .3598 risking $12.
I ended up closing my position on the SELL side at a price of .3566 for a $32 profit and
the BUY side expired OTM losing $14 for a net profit of $18.
If your going for 1 to 1 your math is off you need to make total risk plus risk on other side - your risk 26 and you made 18 so your take profit should have been 8 ticks lower for a 1 to 1
for 1 to 1
buy side ie 14+12 total + 12 (short side)( 36 pips sell higher than bought
sell side ie 14+12+ 14 (long side) 40 pips buy back lower than sold
Got it, thanks.
Great radio show today putting it in perspective.
I was getting a bit confused with the underlying price(thinking that’s where I calculate profit/loss) and the current contract price, when it works off the bid/ask.
So then at settlement the closing price is the final bid/ask…correct?
calculate what price to take profit on the bought contract on the spread and on the sold contract
then compare the range of high to low of the underling to see if the take profit is within that range
Ok just one last question if I may.
If my risk on each side is $10 for a total of $20, when monitoring a trade all I have to do is watch the profitable
side on Nadex(sort of does some of math for you) waiting till one hits $40 for my 1:1 correct?
Now I understand most people probably put take back orders in for this but I like to monitor my trade manually when I can in case I need to exit.
Thanks
If it hit $40 and your risked $20 and lost 10 on one side that would be more than a 1: 1 as you wuld net 30 on a 20 risk
Total risk $20 + risk on other side - ie in this case 10 = $30 risk - so enter - and set take profit 30 ticks higher.
You can still monitor it manually in case you need to exit (ie it does not move far enough etc… but it also could move up blow through your profit target - you go into hit submit - and it flies down and you end up losing before you could hit submit crazy stuff happens during news
