Utilizing the Nadex Touch Brackets with binaries provide traders with potential protection in case the markets go against them. Here is an example of one that I did yesterday on the USDJPY
First, I noticed there was a Nadex Touch Bracket available on the USD/JPY Monday morning (107.50 – 110). Looking at the higher time frame (360 minute) I saw that the Stochastics was overbought and a retracement was likely. However, this is a counter-trend trade and I would be in early as no bearish bar had developed. The price on the touch bracket for entering a short was 109.85 or $15 of risk per contract so I could wait for the bearish bar or enter with a low risk. I opted to enter early but I needed a protection order in case the market continued up.
So I immediately went out to the daily binaries to see what binary options were available around the 110 area (top of the bracket). There was a daily 11am binary option offered at 110 for $27.75 in risk per contract so I entered long on the binary option.
Nadex Touch Brackets with Binaries
In this case, there were several potential outcomes:
- USDJPY moved down and the touch bracket produced profits but the binary option lost.
- USDJPY moved up and the top of the touch bracket was touched but price expired greater than 110 producing profits.
- Price stayed under 110 and above 109.85 (within a fifteen pip range) and the binary lost, as well as the touch bracket.
What happened? Price expired greater than 110 and the binary option made the full payout while the touch bracket lost. More importantly, the probability that the market would move was high with the US market opening at 8am (for forex), and both trades had very low risk so the likelihood of a potential profit was high as long as price moved.
Of course, since I was out and about after 9am, all I had to do was bring up the Nadex app and monitor the trade while I was running errands.
These types of techniques (regardless of whether you are trading the underlying or Nadex), will be taught at the upcoming Guide to Successfully Trading Today’s Markets Seminar in May, which is being held in Greensboro. You can register online by clicking here.