I have had several emails asking if a trader can make a living just trading the Nadex 5 minute binaries. If you have seen my live trading videos on trading these, then you know I only trade 1 contract at a time and for a limited period of time. Here’s why.
One reason is the liquidity — if you are trading multiple contracts, then you may be filled on one or two and the rest remain unfilled. If this happens on exit, the price can end up expiring against you (meaning even though you were profitable on one contract the other four could lose). Although the demo account always shows 100 contracts available, the live typically only has 20 (major difference).
Another reason is that price moves fast on the binaries. Sometimes it moves so fast that you simply cannot get in using a limit order. If you are using market orders, then you are at the mercy of market as this can jump 30 to 40 dollars in seconds.
Can I Make a Living Just Trading Nadex 5 Minute Binaries?
This is a tough question to answer because there is limited liquidity with 5 minute binaries, in my opinion. Plus, there is not always a setup. One of the worst things a trader can do is trade, trade, trade. Although the first couple of trades could be profitable, typically the more you trade the more you give back. Plus, if using the OTM binaries like I do, then you are limited to only trading when the market is moving. Of course, they double the strike width at 8:10 am New York time on most of the majors, as well. So instead of needing a 4 pip move if using OTM, you would need an 8 pip move. Of late, there has been a lot of days where even a 4 pip move is unattainable so an 8 pip move would be out of the question.
So, back to the question, can I make a living just trading Nadex 5 minute binaries? Most traders, who trade for a living, employ multiple types of trading techniques. For example, I may intraday trade the futures, medium term trade some stock options, trade some two hour binaries and some five minute binaries. What I don’t do is put all my trading dollars into one style of trading.
At the end of the week, the best trading may have been from the 5 minute binaries, or the 2 hour, or the futures, or the stock options, or a combination of all of them. Some weeks I may not get but 2 or 3 trades using the 5 minute binaries or 2 or 3 trades using the 2 hour binaries, or no stock options trades or get 5 futures trades. However, I never feel the pressure of being in a trade because I have different store fronts (so to speak).
This is also why I teach all different types of trading techniques in the coaching sessions — scalping, intraday, medium term and starting this week, weekly stock options, which we will add to in the future. Additionally, this week you can sign-up for the annual subscription for the TradingView Indicators and Coaching special offer for only $1,395 ($200 off the normal price). By dividing your trading into multiple styles, you are not relying on trading the Nadex 5 minute binaries for a living and instead of multiple venues for achieving your goals.