I am writing to confirm if I am understanding this concept properly. I was looking at the ?Trading the News with Nadex? webinar recording and it says that you do not have to stay up until 4AM to do a 4:30AM Straddel trade, but rather you can set it up at like 11PM and go to bed. So lets say you are going for a 1 to 1 risk/reward which has a 25 pip potential gain, so you set up your buy back and sell back to make 25 pips, and prior to the news coming out, one side is up let’s say 23 pips, so you are still in the trade when the news does come out. The market then goes 25 pips in the opposite direction to your gain, which brings the market back to your entry prices and you now have a maximum total loss on your hands. I realize that I have used worst case numbers, but is this analysis potential correct?
Straddle Trade
in a word - yes, but if u want to be warned, use the DEMO to create a trade that will send email to your phone or use NADEX mobile app to wake you.
I’m new and would like some clarification on something,… you would buy a spread if you thought that, or had reason to believe that it would stay in the floor/ceiling specified by the contract, well I only had about 12.00 in my account by cause of my ever increasing dis interest (due to lack of understanding), and decided to sell the contract because it cost only a couple of bucks (what the hell, right?). well, that contract actually ended up staying within the floor/ceiling specified by the contract, now…, had i actually had the 35.00 or so in my account to cover a buy on that spread with a profit of 86.00, instead of selling it for 6.00 and some change, would i have made a profit? I am to assume, buying the spread where the underlying market stays within the Floor or ceiling would be a profit?, so what if you where to sell a spread that stayed within its floor/ceiling, which is what i did just for the heck of it,…mind you, I’m using real money to play with. I’m know I’m probably setting myself up for some future mockery on someones webinar, but I’ll take it. Also, what you meant by buying at the floor of the underlying, and selling at the ceiling is, that you basically select the buy, and the sell of the same contract, is that correct?, that was something that wasn’t really clarified. I found it difficult to actually by at the underlying price as there where only 3 contracts to choose from, I could only get so close, did you specify we needed to be dead on or only close to the underlying price. I am assuming that one of those 3 contracts where already at the market price because I went through a few of the different forex spreads (1:00am - 3:00am), and each only listed 3 contracts is that normal?
(Tip - lots of great comments and questions- separating them out by question does help)
INSIDE THE RANGE OF THE SPREAD? You would buy a spread if you thought the market would go above the price you bought the spread at. You would sell a spread if you thought the market would go down below the price you sold the spread at.
You don’t care if it stays in the range of the spread. If it goes through the ceiling on a buy then great you make max profit at expiration. (likewise if it when under the floor on a sell you make make max profit)
If it expires between where you buy and the floor you would still lose some risk.
The profit is the difference between where you buy an sell or it expires maxing out at the ceiling or higher.
The loss is the difference between where you by or sell or it expires - maxing out at the floor or lower
LACK OF UNDERSTANDING If you have a lack of understanding then go through the education - nadex (getting started, then platform training, then spread training, then go over to the spread scanner and spread scanner tutorial) you will be an expert in a matter of hours. For more education go to education - webinar recordings - bonus webinars (focus on ones that cover spreads)
EXAMPLE? Regarding your example i would need the spread floor and ceiling. The price you bought and exited at. and the underlying price at the time of entry and expiration.
Your comments seem a bit confused.
STRADDLE - NOT SAME CONTRACT
On a straddle - this is where i buy the spread above the market and sell the spread below the market
ie xyz is at 1600
i buy the 1600 to 1700 - ie at 1615 ($15 risk -max profit 85) and i sell the 1500-1600 - ie at 1585 ($15 risk - max profit 85)
Note these are two different contracts not the same contract. They are the same market XYZ but the nadex contracts are different If i buy and sell the same contract i will be closing it.
You will rarely buy the spread AT the market price as there is some premium built in. Its a option that is how options work. But it is a simple option not complex… Make sure to watch the spread videos and scanner tutorial videos listed above… the lower the iv, the closer to the center, the closer to expiration the closer the price of the spread will be to the underlying…i cover this in one of the videos cover the pricing of a nadex spread
3 Contracts 1 Expiration Yes every expiration time will have 3 contracts Thought you may have a daily 3 pm and an intraday 3 pm overlap so you would have 6 total (see all 6 on the scanner - you would have to click multiple places to see it on nadex platform)
ie if xyz is at 1600 at 9 am and xyz has 9-11 am expirations which are 100 ticks wide then nadex will list the following
1600-1700 100 ticks above 1550-1650 (50 ticks above 50 ticks below - 100 ticks wide) 1500-1650 100 ticks below
the scanner has a ATM filter showing you spreads within 10 ticks of the underlying
thank you so very much darrel, that is exactly what I needed, next time I’ll try not to write so early in the morning, lol Happy Thanksgiving.
