Step By Step Boomerang Rules

#27

would I look through the list of fixed binaries on the scanner and select the closest OTM from there? or would I open up a ticket and switch to stop function and enter the exact desired entry strike (few ticks above or below) from the current market?

also does it matter from which contract i switch over to stop function? im thinking that price on the contract doesnt matter in that i’d essentially be adjusting the price of the binary to roughly 40 bucks in that im moving its value back to near OTM via selecting a close OTM strike price.

I watched the videos and I dont recall having seen a fixed price be chosen from the list of contracts; just the manual typing in of exact numbers.

thanks in advance.

#28

Have a few more questions,

first one regarding preference forOTM binaries in that they don’t require a stop loss. what does that mean? I don’t understand it at all, I would think it would in that the market can swing both to one extreme and the other and would therefore be wise for one to lock a stoploss no matter what direction it swings away from your favor.

also say you’ve been riding a trade collecting profit (entered a p1 buy sloping up, entered p1 sell sloping down). what hints do I look for that indicate that I should get out of the trade? or that it will swing the othre direction? In the video, ideally 20 was what was mentioned, but I care more about being as safe as possible. when would be the ideal time to leave a trade with profit?

sort of hesitant only because Ive been spewing out non stop… but apex encourages it :slight_smile: so spew i will…

#29

[quote=cnobles84]Have a few more questions,

first one regarding preference forOTM binaries in that they don’t require a stop loss. what does that mean? I don’t understand it at all, I would think it would in that the market can swing both to one extreme and the other and would therefore be wise for one to lock a stoploss no matter what direction it swings away from your favor.

also say you’ve been riding a trade collecting profit (entered a p1 buy sloping up, entered p1 sell sloping down). what hints do I look for that indicate that I should get out of the trade? or that it will swing the othre direction? In the video, ideally 20 was what was mentioned, but I care more about being as safe as possible. when would be the ideal time to leave a trade with profit?

sort of hesitant only because Ive been spewing out non stop… but apex encourages it :slight_smile: so spew i will…[/quote]

Binaries Options are limited risk instruments. Meaning you can not lose more than $100 dollars per contract no matter how far the underlying market swings. OTM Binaries are your lowest risk (cost/max loss) to enter and therefore using a stop loss is not really necessary. With OTM binaries, the market will have to move in your favor to become profitable. If the market doesn’t move in your favor or expire above your strike on a buy or at or below on a Sell then you are going to lose the money you put up, if that is the case, why would you use a stop loss? Where would you put your stop loss? if the market swung at all against you, you would get whipsawed out to save a few dollars. This is the unique thing about binaries, the ability to stay in a trade without a stop loss.

For example, if you bought a $20 binary on a long position, the most you can lose is $20, but your potential full profit is $80. IF the market moves in your favor and expires above the strike you selected. you could set a profit order to get out and sell back at $40 for a 1:1 risk to reward of +$20. If you were right and you expire in the money and net all $80, that could be 300% profit!

compare this to an ITM binary where you bought a strike for $80 (risking $80) and your max profit is $20. With ITM money Binaries the market is already above your chosen strike and the market can go against you, stay flat, or go up and you can make money. In this case however with ITM binaries you are risking $80 to make $20, therefore a stop loss would be a very good idea. Like on the P2 trades for example, buying ITM strikes your are risking $70 to $80. Setting a stop loss to get you out at about $50 or if the market swings against you and hits your strike. This way you only lose $25 to $30 to make $20 to $30 dollars. If you are right about 65% of your trades you will be profitable.

You could still use a stop loss on OTM binaries but I think you will find that you will get stopped out of a lot of potential winners, especially if you are doing expiration trend premium collection where the binaries can go a little crazy in the last 10 minutes.

#30

Thank you for the prompt reply :slight_smile:

One more boomerang related question (if you dont mind answering)

In the boomerang tutorial videos, darrell wasnt trying to communicate that the volume exceeding expectations on entry bar within close to close tell you anything was he? only that you ought to prepare to enter at a tick above a buy (or below for a sell) and that the confirmation comes when the SECOND bar goes in the same direction and BREAKS the high (or low for a sell) of the first bar…? I’ve reviewed todays chart for USD/JPY to see if I was able to identify as many p1’s as I could just to test my knowledge when I realized the above issue.

while were at it, when a bar opens and then drops, and then jumps back up and closes (forming a T), would that be considered a buy or sell? it was green and the volume was exceeded by 100%…

#31

[quote=cnobles84]Thank you for the prompt reply :slight_smile:

One more boomerang related question (if you dont mind answering)

In the boomerang tutorial videos, darrell wasnt trying to communicate that the volume exceeding expectations on entry bar within close to close tell you anything was he? only that you ought to prepare to enter at a tick above a buy (or below for a sell) and that the confirmation comes when the SECOND bar goes in the same direction and BREAKS the high (or low for a sell) of the first bar…? I’ve reviewed todays chart for USD/JPY to see if I was able to identify as many p1’s as I could just to test my knowledge when I realized the above issue.

while were at it, when a bar opens and then drops, and then jumps back up and closes (forming a T), would that be considered a buy or sell? it was green and the volume was exceeded by 100%…[/quote]

Sounds like you are asking about P1’s.

here are the P1 rules from the first page of this thread:

P1 - Boomerang Launch, a close OTM strike

  1. Bar exceeds volume (Step 1 in yellow, on chart) 2) Low/High of bar is within the close to close range box (the boxes inside the hi to low range boxes)
  2. Subsequent bar breaks high or low (high, if the bar where actual volume exceeded expected volume closed up) (low, if the bar where actual volume exceeded expected volume closed down) (Step 2 in yellow on chart)

TIPS:

A) Since P1’s happen so early in the hour, the ITM binary will move very slow making it difficult to take profit (gamma impact on delta etc… etc…). Long story short, choose a close OTM binary that you can set an easy take profit for at least $20+ and often for more. Expect it to move around a lot, but come back by expiration and take profit. Using the OTM removes the need for a stop loss which is important on P1’s.

B) P1 setups can actually occur in the hour before the next hour. Be on the look out for these as well (it will take some practice to start seeing them, but they are often great trades).

C) Note you cannot have a current hour P1 entry after a P2 HAS taken place. If a P2 has taken place then it could be a P3, see below for P3 rules.

D) You can only have one P1 per hour.

#32

You need to find an acceptable OTM strike. That may be the closest it may be the next closets it may even be the next hour. Look at the risk look at the distance and make sure it makes sense. They are options the market is moving the strikes are varying you have to look at whats there. The market is not always at x price strikes are not always at x strike at x price so you have to look at real live market conditions to trade sorry but that is just how it is. I would put $10 in the offset. I would put a max price of say $45 but honestly i usually enter for much less. You just have to look at real market conditions when choosing the option.

You don’t enter the strike in the trigger you enter the trigger price at where the trigger price that would signal entry is to enter and buy or sell whatever strike.

You do use the stop trigger for entry. You don’t need it for exit on an OTM binary.

[quote=cnobles84]would I look through the list of fixed binaries on the scanner and select the closest OTM from there? or would I open up a ticket and switch to stop function and enter the exact desired entry strike (few ticks above or below) from the current market?

also does it matter from which contract i switch over to stop function? im thinking that price on the contract doesnt matter in that i’d essentially be adjusting the price of the binary to roughly 40 bucks in that im moving its value back to near OTM via selecting a close OTM strike price.

I watched the videos and I dont recall having seen a fixed price be chosen from the list of contracts; just the manual typing in of exact numbers.

thanks in advance.[/quote]

#33

You really need to be in the pit posting your charts and posting your trades to really get this down you are not going to get it all down in a thread or just by watching a course of videos you are gong to HAVE to be engaged in the community.

#34

Hi, I don’t understand this step in the P1 strategy: 2) Low/High of bar is within the close to close range box (the boxes inside the hi to low range boxes)

Thanks

#35

We have a hi to lo range and we have a close to close range plotted on the boomerang template.

Close to close is the rectangles inside th ehigh to low rectangles.

The low of the setup bar to enter or the low of the setup bar to enter must be within the close to close. Basically we don’t do a P1 if any bar in that hour has went out of the close to close area plotted on the chart.

#36

Hi guys. Was following a P1 and it started to go against me. I’m sure I know what I did wrong, but would just like some confirmation from you guys.

I apologize in advance, I realize that this would be much easier to understand with pictures. I took a few snapshots but wasnt able to upload them.

I went long into a P1 at the beginning of the hour. expected volume was exceeded and the next bar broke the the previous (volume exceeding) bar’s high. I bought a tick above.

it then, basically, went lower all the way down to expiration. Thank god I was on demo.

I was aware, however, that the first bar (volume exceeding) was a doji. it was a perfect cross/plus sign (+) so closing direction was unclear. But if I recall correctly DM taught that the high or low of the volume exceeding bar has to be broken, which it did. in hindsight maybe I shouldve been sure of whether the second bar was breaking the high or the low of the last which I’ve already recalled I was unsure of. funny how I realize all this only in writing it out. :stuck_out_tongue:

I guess my train of thought was that it was the second bar and its breaking the high or low of the last bar was which determined whether I bought or sold, and that as long as the first bar exceeds volume, I would then place a buy or sell order depending on which side of the first bar(high or low)the second bar breaks. ie, have the second bar alone be the determining factor of which way I go rather than considering both.

I may just be reading too closely into it, but are doji bars to be disregarded in any entry move? DM was adamant about avoiding dojis in the P2 tutorials, does the same go for any entry? (is it just common sense? :X ?).

ALSO, when two consecutive bars exceed volume, do I disregard the first and start over, treating the second bar as the “set up” and waiting to see if the next bar breaks its high or low? I saw this on the chart within the same hour as the above trade and noticed that had I followed the entry rules I wouldve lost again.

Ill try posting pics again, but for reference, this session was on the AUD/USD from 15:00-15.50 EST.

Thanks guys.

#37

Go here to see how to share charts in the forum: http://apexinvesting.net/forum/how-share-charts-other-traders-230/how-post-chart-forum-1932.html

#38

The setup/exceeding volume bar on a P1 must not be a doji or a p2 or a p3. Also the entry price has to be inside the close to close.

If one bar exceeded but high/low was not broke in the direction of the close of the setup bar and a new bar forms that does then that would be the news setup bar. Just consider the setup bar not multiple bars for the exceeding volume setup bar.

If you can post a chart we can help but its a bit unclear without it.

#39

Hey Darrell, Thanks for the quick response.

Also forgot to ask you,

Do I enter a trade immediately after the high or low of the first/set up bar is broken? or do I wait until after the second/confirmation bar is done forming to enter?

#40

just to make sure I understand,

if bar1 exceeds volume and bar2 does not break high or low of bar1, but bar 3 DOES, would that be a set up bar?

and by set up, do you mean the bar we consider once it breaks high or low of bar 1? I bit confused; by set up bar, I was thinking the bar that has to break volume (bar 1).

basically, the volume bar and the high/low break bar don’t have to be back to back?

#41

When a bar exceeds volume it is a set up bar. If the VERY NEXT bar breaks it , then you have entry. But if not , then no entry. You do not wait several bars later to break it. If several bars later you have another volume bar , that would be the new set up bar

#42

thank you skelton :slight_smile:

#43

[quote=darrell]TOP OF HOUR RANGE BUTTERFLY OR IRON CONDOR

This could be done on 60 minute, 120 minute, ie 391 min on corn/soybeans, or daily 1440 etc…

Putting a limit to buy a strike below the low channel for 85 and a to sell a strike above the high channel for 85. Sometimes both will get filled. Usually one will get filled. In all cases exit if the market hits the strike (or if strike is beyond the range if market breaks the high/low of the range by a tick using stop trigger[/quote]

Hello,

I’m new around here but I have a question about what you said above. Did you really mean to both buy below and sell above the channel at $85, or was this just a typo? It seems it would make more sense to either sell above the channel for 15 and buy below for $85, or else sell above the channel for $85 and buy below the channel for $15 with the former scenario being the most probable one.

#44

Im talking about risk not price sorry about any confusion - good catch :slight_smile:

#45

No problem! Thanks for the clarification!

#46

I don’t understand the exception for phase 2. The rule states volume exceeding on setup OR reversal and here it is on the setup. Why the need for the exception? And in the exception it says that the Hi-Lo >75%, what makes this important since #3 says >75% OR Volume exceeding. Also, Hi-Lo >75% can be on either setup or reversal?

[quote=ultimatrader10k]Excellent example of the Exception of High Volume ON the reversal bar on P2, Reversal Bar Low Volume

04.10.2014-20.35.png629x731
[/quote]