Here’s a trade that I did on the Nasdaq futures for 8 1/2 points this morning. The following charts show why I entered the trade, what I anticipated price to do, and how I managed the trade.

The higher timeframe NQ charts indicated the market was overbought. The 5-minute stochastics revealed divergence. A magenta peak was forming on the ADX. Price formed a bearish bar indicating the market would go down. The entry price was 9238 and an automatic stop and profit target was set.

Nasdaq Futures - 5 Minute Entry
Nasdaq Futures – 5 Minute Entry

Price moves down as anticipated, breaks through the fast-moving average (FMA) and then retests it to ensure that resistance has formed in this area. At this point, my anticipation is that price will break through the ATR stop at around 9232.

NQ Forms Resistance at FMA
NQ Forms Resistance at FMA

As price moves to the ATR, I notice the stochastics is very close to the point of being oversold. I anticipate that instead of reaching my initial target, a better objective would be a couple of ticks above the congestion dot (blue dot on the chart).

NQ – Moved Stop

Price moves down and the profit target is filled resulting in a profit of 8 1/2 points on the Nasdaq futures. The green circle identifies the entire trade duration, from entry to exit. The initial risk on the trade was 5 points. The overall risk to reward was 1 : 1.7.

Unfortunately, the two-hour binary options for the Nasdaq do not begin until 8am New York time and the daily binary option is not used for a 5-minute entry.