By Darrell Martin
There are times when you are in the middle of a trade that your gut tells you that you’ve got to get out. You listen. You exit the trade and you’re glad you followed your feelings. This is rarely the case. Usually, you wish that you had stayed in. It is a dangerous game that can lead to heavy losses if your trading is allowed to be managed by only your gut feelings. It is so much better if you can trade what you see instead of what you feel.
A few weeks ago, while trading Nadex binaries, there was a potential trade set up on USD/JPY that looked like it would be a good short trade with a strike price of $102.36. The market was trading at $102.34. This was an ITM binary. It was confirmed on a short and 10 contracts were sold at $21.
The best way to arrive at your take profit price is to look at the price ladder and see where the market is trading. By looking at the price ladder, contracts were being bought back at $7 or $8, so take profit was set at $8.
Apex Investing Spike Striker is a trading system that confirmed the short entry and it was just down to waiting. Sometimes that’s what it feels like when trading: tick, tick, tick. This trade was right at the max expected range of the trade. Because it was right at the expected level and had volume exceeding expectations, it provided a better place to enter. This gave another entry you could layer into the trade you had already placed, or enter a trade if you had missed the first opportunity. However, it must be watched very carefully and if it moved up, you would need to hop out. On the chart below, you can see the movement the market was making at this time. Notice how it is right at the top of the expected range.
s you are shorting the market, another 10 contracts were sold at this time for $46 with take profit set at $20. This may be where your gut screams at you to get out! But, no! You must be strong and trade what you see, not what you feel. The expected range serves as a good resistance level and gives you confidence to stay in the trade. You can focus on the importance of the support and resistance that you observe in the chart.
This USD/JPY trade ended profitable on all positions. The first 10 contracts sold were averaged with the second 10 contracts sold for an average fill price of $33.50. The buyback prices were averaged at $14.50. When you do the math, $33.50 - $14.50 =$19 profit on 20 contracts for an overall profit of $380. That was on one twenty minute trade on Nadex. That is when you can look at yourself and be happy that you traded what you saw instead of what you felt!
If you would like to learn more about the importance of support and resistance, the Apex Investing Spike Striker and other strategies, go to www.apexinvesting.com. Apex Investing Institute offers free education, and free access to the Nadex Binary and Spread Scanner Analyzers. Member traders are invited to trade in the rooms, take advantage of trade signal services, have key indicators and access the Apex Forum. The forum content is updated daily and includes over 7000 members. In a supportive learning community of seasoned as well as up and coming traders, traders of all levels learn how to trade Nadex binaries and spreads in depth, as well as futures, Forex, stock and options, and gain an edge for successful trading overall.