Weird Spot Pricing on EURUSD Binary

#1

I traded a spike striker on the EUR/USD last night that went against me, and the pricing was really weird as the underlying rose. Hopefully this screenshot link works, for some reason I can’t attach anything here in the forums, and it won’t let my use screencast links as attachments.

EURUSD_Pricing.png1183x842

This was the EUR/USD>1.3613 (8pm) tonight, and on the chart I’m listing the spot price (bid-ask avg) of the binary @ the underlying’s value then. The indicative was about .0008 above the underlying value the whole time, but I understand from one of your webinars that the pricing should be based on the FOREX spot, not the indicative. Although this wouldn’t even account for how far off the pricing was.

As you can see, the binary was priced high, (when the underlying hit the strike price, the binary was priced at about $80).

What ****ed was, I used the price simulator on the scanner to choose a stop (1.3615 on indicative) that would get me out at about $60, but because the spot price was so much higher than it should have been, that stop didn’t execute until the asks had already dried up (ask had passed $99).

Only had 2 contracts, so not a huge deal, just thought this was really strange and maybe someone else had seen this happen before.

Thanks, Mike

#2

Oh just to be clear, I’m not complaining about the spike going against me; totally understand that they’re not all going to be winners.
It’s the high pricing that I’m confused about.

#3

Im not sure why your doing a sell (recall i often don’t take spikes at end of hours)

Forex is OTC it is not exchange based.

So various brokers have various data feeds depending on the bank they are getting their FX conversions from.

Nadex uses the standard in data Reuters. This will cost a bit more than most are used to paying though in the 4 figure range for data on reuters.

Your most likely using FXCM so the data can vary from reuters - and your looking at last - your not looking at current bid/offer on your chart.

So the last offer or bid hit is what you see plotted on the chart but the current bid/offer could be much different (specifically at night) - see a dom in nt7 for current bid/offer for fxcm. this will most often account for the difference in pricing.

#4

Roger on the data feed disparity.

Your first comment has me worried now: I was selling based on the 10min spike on top (sell) then 3 bars later a tick below the previous bar (confirmation). So if this is right, are you saying that a spike near or at the end of an hour doesn’t carry over? So both lightning bolts need to be in the current hour for spike striker signal to be valid?

Thanks, Mike

#5

Basically, is this sell signal invalid because the spike came in the previous hour?

Spike_example.png1024x625

#6

You can do it however you want. Personally i like them to not be at the top of the hour like that. Like all systems you have to get the why. If your doing a ITM top of hour that is going to move painfully slow be hard to take profit and have a ton of time to move against you with the profit moving slowing for you.

But backtest it every market and time of day has their own little personalities. So test it on the times you trade and the instruments you trade for a minimum of the past 20 days. And see what patterns you see. Just load up a chart scroll back and (turn on historical in the indicator settings) and then just move forward 1 bar at a time using the right arrow. (quick fast and easy way to backtest)

I am more likely to do an OTM and take a faster profit than an ITM at the top of an hour.

As the gamma (rate of change of the price) of the binary (which a binary price is essentially the delta of a call option) increases on an OTM and is decreasing on an ITM and with more time to expiration this decrease is exaggerated even more.

Side note: Please see this link on how to share the image versus having to do a hyperlink - directly in the forum: http://apexinvesting.net/forum/how-share-charts-other-traders-230/#.U71hUfl318E I fixed the image for you again

just click on the short link - get the longer link - click the image button - choose url - paste the long link - uncheck the box and click ok