I developed this method, and I find it easier to use than other methods. It may seem complicated a first glance, but there are [COLOR="#0000FF"]only three simple steps[/color]. I explain them in detail to avoid any confusion, so don’t let what appears to be many steps discourage you from trying it. Examples are demonstrated in posts #2 & #3. It’s assumed that you understand how to operate the NADEX platform.
IMPORTANT - practice this method in DEMO to ensure that you understand it and are comfortable with it before using it to place LIVE trades! [COLOR="#FF0000"][COLOR="#FF0000"][COLOR="#0000FF"] A method to use the NADEX ticket to determine the spread straddle long and short exits[/color][/color][/color]
NOTE: ONE straddle is 1 long spread & 1 short spread. Multiple straddles is 2:2, 3:3, 4:4, etc.
1. After both long and short positions are visible in the Open Positions section of the NADEX platform, determine the $ Total Cost of the straddle(s) in one of three ways.
A. SIMPLE - If the straddle(s) spreads ratio is 1, ie 1:1, 2:2, etc., and the floor & ceiling are common, then ONE straddle $ Total Cost = long entry price – short entry price, ignoring the decimal. Adjust $ Total Cost accordingly for multiple straddles. Open exit tickets and proceed to Step 2.
B. TRANSACTIONS - View the transactions by clicking on Account → Transactions to see the long and short cost of each spread. Add them to determine the $ Total Cost of the entire straddle(s). Open exit tickets and proceed to Step 2.
C. PREFERRED - Click on the long and short positions in the Open Positions section to open one exit ticket for each position. Drag to arrange the tickets side-by-side. [indent] i. Enter the long entry price in the sell to exit long ticket. Max Profit is its $ cost. DO NOT PLACE ORDER
ii. Enter the short entry price in the buy to exit short ticket. Max Profit is its $ cost. DO NOT PLACE ORDER
iii. The sum of both Max Profits is the $ Total Cost of the entire straddle(s).
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2. Calculate the $ GROSS Profit by multiplying the $ Total Cost from Step 1. by the GROSS profit %.
2.1. GROSS Profit % = 100% + desired NET profit %. For desired NET profit of 75%, then the GROSS Profit % = 100% + 75% = 175%.
2.2. $ GROSS profit = $ Total Cost (from Step 1.) X GROSS Profit % (175% or 1.75, 200% or 2.00, etc.)
3. Change the exit tickets Price to the desired profit target.
3.1. Increase the sell to exit long ticket price until the Max Profit = $ GROSS Profit, click Place Order.
3.2. Decrease the buy to exit short ticket price until the Max Profit = $ GROSS Profit, click Place Order.
TIP - If the straddle(s) spread ratio is 1, ie 1:1, 2:2, etc., and the floor & ceiling are common, for the exits add the $ GROSS Profit for ONE straddle to the floor and subtract it from the ceiling, allowing for the decimal. Enter those prices in the Price box, allowing for decimal. Confirm that the ticket $ Max Profit = $ GROSS Profit from Step 2.
OPTIONAL – Add the total fees amount (including exit fees on one side) to each ticket by increasing the sell to exit long ticket price and decreasing the buy to exit short ticket price.
4. OPTIONAL advanced exit strategies
A. If profit target reached on one side, then change remaining ticket price = entry price (Open Positions Avg Price) to possibly recoup its cost (or leave at original profit target).
B. If original NET profit seems unattainable, reduce to desired amount by recalculating and changing targets as in steps 2. and 3.
C. If trade is unfavorable, change targets to straddle break-even by changing both ticket prices until the ticket Max Profit = $ Total Cost from step 1., or further reduce to entry price of each ticket (as in Step 4.A.).
D. Enter multiple straddles and scale-out at increasing profit target prices by using multiple exit tickets, reducing the number of spreads in each exit ticket.
This method applies to unbalanced ratio straddles, ie 2:3, 3:5, etc, and/or unequal long-floor / short-ceiling straddles.
SUMMARY: determine $ Total Cost, calculate $ GROSS profit, change the exit tickets Price to the desired profit target.
Please notify me http://apexinvesting.net/forum/members/s_mark220.html or the staff of any suggestions, errors, or omissions.
