What Am I Missing


#1

I’ve watched countless Apex educational videos and have demo and live traded for a while now and I still am unsure about this. I’m trying to understand the difference between the Nadex spread price and the market price. I understand one tick equals one dollar as it relates to the spread price. However, this does not equal a one tick move in the market.

It appears that the market has to move more than one tick for the spread price to move one dollar. This makes it difficult to know how far the market has to move to reach a desired order price since it’s not tick for tick.

For example: If I enter a Nasdaq spread at a 10 price and I want a 100% return, I know I would set my order at 10 above or below but how many ticks does the market actually have to move to reach this? Or, if I believe the market will move 20 ticks, how would I set my order to capture this move (knowing the market and the spread price are not tick for tick)?

Please help me to better understand this.


#2

Use the date box to see what is going on. You can set that up the way you like.


#3

Thank you for your response. I’m sorry to say I’m unclear about “date box.” Could you please provide a link or further direction.


#4

the Nasdaq 100 spread is one of the lowest leverage spreads. Notice how on the spread scanner it tells you the US Tech 100 spread ticks in 1

But the NQ futures tick in .25 So the NQ futures must move 4 ticks to move 1 point

This means lower leverage - lower risk and yes lower profit.

Also this means a 12 tick move on NQ is only a 3 tick move on US tech 100

If the bid/ask is 3 ticks on US tech 100 you would at best be at break even.

So you may want to pick something of normal leverage that ticks the same like YM TF

Or depending on account size something with higher leverage like US 500 - it ticks in .1 - and the ES futures tick in .25 so it ticks EVEN faster than the futures market.

In addition you need to pay attention to the proximity to the underlying market column on the scanner as this is the difference between where the spread is priced and the underlying is price. The spread will move slower than the underlying until the underlying gets tot he price at which you bought the spread at which it will move much faster.

the spread you choose is not simply dependent on risk it’s dependent on your system rules based on the underlying market for entry and exit.

If you just go in and choose the low risk $5 out of the money spread that is 20 ticks away from the market then you are saying i want to lower my risk and in exchange i will give up some of the movement in order to have a lower risk as i expect it to move big and when/if it does then I can have the potential to make a large profit. if you want a spread that moves nearly the exact same speed as the underlying choose a ATM spread (ie one within about 10 ticks/pips proximity distance to the underlying market- again make sure to look at tick size as 10 ticks on NQ is 2.5 point move - where 10 ticks on Small Cap 2000 is only a 1 point move on TF same with US 500 spreads on ES

Also this Monday at 7 PM ET i will have a webinar about how to pick the best spread and I highly suggest you are on it so I can help you directly :slight_smile:

Darrell

I did a webinar last week called nadex spreads made easy and I highly suggest you check it out it should help you some on this.

[quote=tradingnbo]I’ve watched countless Apex educational videos and have demo and live traded for a while now and I still am unsure about this. I’m trying to understand the difference between the Nadex spread price and the market price. I understand one tick equals one dollar as it relates to the spread price. However, this does not equal a one tick move in the market.

It appears that the market has to move more than one tick for the spread price to move one dollar. This makes it difficult to know how far the market has to move to reach a desired order price since it’s not tick for tick.

For example: If I enter a Nasdaq spread at a 10 price and I want a 100% return, I know I would set my order at 10 above or below but how many ticks does the market actually have to move to reach this? Or, if I believe the market will move 20 ticks, how would I set my order to capture this move (knowing the market and the spread price are not tick for tick)?

Please help me to better understand this.[/quote]


#5

That was exactly what I was missing. Darrell, thank you. That explains so much for me.

I will be on the upcoming webinar and will go back and relisten to last week’s webinar.

Again, thank you.