The Nadex Touch Brackets are a new product that Nadex has released in demo mode and will soon be releasing in the live accounts. They are very similar to the Call Spreads but use an “if touched”, in addition, to the value at expiration.
In this example, Gail Mercer, founder of TradersHelpDesk, shows you an example of using the Nadex touch bracket on the USDJPY. The pattern that is used in the example is one that Gail wrote about on the Nadex Market News and a pattern that she covers in the new Guide to Successfully Trading Today’s Markets in 90 Days – Beginner’s Level.
How do the Nadex Touch Brackets work?
They are very similar to the Call Spreads — they consist of both a floor and ceiling. They have a weekly expiration. The biggest difference is that if the floor or ceiling is “touched” the trade is exited (either for a loss or for a reward). There are initially four brackets opened. Then, if the market moves completely through a bracket, a new bracket is opened.
The Nadex Touch Brackets are great for trading risk to reward. In this example, Gail was risking $32 and the trade has already generated over $65 in profits or a 1 : 2 risk to reward. If price touches the floor at 110.32 then the trade is automatically exited with a $218 profit or a 1 : 6.81 risk to reward. Of course, the trader also has the option of exiting at any time.