Trading mini Dow Jones using the TradersHelpDesk indicators provide low risk entry points regardless of whether the trader is using binary options or the futures contract. Here’s an example from this morning.
Trading Mini Dow Jones Futures
The 3 minute chart below shows an entry as price retraces back to the average true range stop (ATR), which is the blue plus sign plotted on the chart below. Now look to the TradersHelpDesk Stochastics — price is making higher lows but the Stochastics is making lower lows. This is known as hidden divergence — in this case, price is making lower lows but the Stochastics was making lower lows (going in the opposite direction).
Trading mini Dow Jones the entry was at 20665 and the trader could have placed a stop at 20660 (five ticks below their entry).
With price forming a reversal bar, the trader has the option to take profits or move their stop up to below the low of the previous bar, especially with the Stochastics showing a status of Overbought. However, remember overbought only means that the market will likely retrace (not necessarily turn). If the trader opted to exit at 20685 then he would have made 20 points. The risk to reward on the trade, based on using a five tick stop, was 1 to 4. That means for every dollar of risk the trader made four dollars in reward. Additionally, that means the traders doesn’t need a high winning percentage because they have compensated for the loses by increasing their profits.
Of course, if trading mini Dow Jones using binary options, the trader would need to use a daily binary option because the two hour binaries are not available until 8am New York time.