Cycle Trading

I"ve been shorting the crap out the S&P the past couple of days. I think this "correction" to the down side is going to run out a while. I'm building a position in my robinhood with ETF's that short the S&P. That account is up 6% in days already. I'll build it slowly over time and hedge out any forecasted moves against me since robinhood now has options.

My forecast tool has been spot on and I've bought shares at every top and also did a few Nadex binaries.

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Hi JR97 I remember your blog

Hi JR,

Do you have any idea how to decompose the waves from intraday? Looks like you are also using wave decomposition in your favourite forecast lines.

regards,
Manth

No, I don't do wave decomp. The guy who does wave decomp the best is Lars Von Thienen.

https://www.amazon.com/Decoding-Hidd.../dp/1499283490

One of the things I love about Nadex is that you don't need very much movement to make good money. Using my cycle forecast for timing and my active range hourly "candle box" indicator, I nailed the top on AUDUSD and banked 90% of full payout on an 2 hr ITM binary.

This trade is a great example of having a set routine that can be done trade after trade. My routine is basically Pattern, Price, Time.

Pattern - Are there any discernible patterns? Trend oscillations (higher highs, higher lows), consolidation patterns, reversal patterns, etc.
Price - Support/Resistance areas, pivots, fibs, my range pivots, active target levels, deviation channels, etc.
Time - Static cycle counts, Gann lines, mirror cycle forecasts, price-time forecast (my go to wavy line forecast these days) or my 4d price forecast wavy line I used to use in wave59. There are a few others I look at but never show here.

The first chart is the 30 min. which has the cycle forecast showing a possible high during a relatively slow time of day.
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I then dropped down to the 5 min. and overlayed an hourly candle box over the 5 minute bars. Price had made a higher high and was testing that high again but with osci divergence. The green solid line towards the top the green box is the active range target line based on historic volatility.

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Knowing that this time of day (night) has a relatively small range the target was the 1st green line and not those higher up. I then chose a strike that was ITM in order to protect the trade albeit at a higher dollar risk. Now it's just a matter of waiting out the option to expire ITM or trigger my t/p which I set to capture about 90% of the settlement value based on a few calcs which included targeting the next candle box's low side active target line. That is only about 7 pips of movement which translates to 70 ticks in the option pricing. I only need to finish 1 tick ITM to get paid out on expiry. I normally don't let trades go to expiry because there's nothing worse than seeing a winner turn to a loser in the last minutes. Because of the higher dollar risk of doing an ITM option it just isn't worth it take chances to try and pocket a few extra dollars. Anywho, price ran straight down to the projected range line, cashed me out, and never dropped below that line in that hour.

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On $60 risk per contract I made $30 per contract. Even though that's a negative r:r trade, it had a nominal 60% chance of success based on the option pricing and an 85% chance of success based on my success rate with this setup. Not bad for only 7 pips movement. Ideally, I would have done an Iron Butterfly on it, but my take/profit order hit before I had a chance to get the lower wing set. Otherwise I would have had a positive r:r trade risking $30 to make $60.

I can usually find 1-2 of these setups a night on AUDUSD.

Just cashed AUDUSD again. This trade is pretty much like clockwork. Literally. Slightly OTM strike of .7884 2hr binary with about an hour left in it.

Entry 30 min: http://content.screencast.com/users/...0Mar.%2014.gif

Exit 5 min: http://content.screencast.com/users/...0Mar.%2014.gif

Exit 30 min: (cleaner chart) http://content.screencast.com/users/...0Mar.%2014.gif

You have a great thread here, JR, kudos - I am looking forward to having some time to go through it. Thanks for putting in the time and effort to show how you trade.

2 AUD trades on the Sydney open. Jumped the gun and got in too early on the first. It had to absorb some heat, got into profit, but closed OTM on the .7710 strike. I was on the road and wasn't able to manage it. Got it on the next hour and it expired in the ITM on the .7704 strike. Overall ended up slightly in the negative between the two.
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Last night's EUR/USD on strikes of 1.2340 OTM and 1.2320 OTM. 1.2320 cashed on the touch and I'm holding 1.2340 til expiration or signs of trouble. Whichever comes first. It's pretty deep ITM and I'm pretty sure I can get full payout at 3:00pm expiry.

entries: http://content.screencast.com/users/...0Mar.%2020.gif
current: http://content.screencast.com/users/...0Mar.%2020.gif

Here is one of last night/this morning's Nadex trades. It's an example of using a put spread to hedge a call spread. Almost like a straddle, but not really because I had a definite directional bias. It's also an example of how there are situations where a trade can be setup to be almost zero risk. The stars don't always align but when they do, it's a great setup.

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Going into the London open, I was thinking the GBP/JPY pair wasn't going to be making a huge run up again and was either going to remain relatively flat or run down. Wanting to catch pips if there was a run down, I bought a spread that had low premium but price was almost right in the middle of the box meaning there was a decent amount of room to both the floor and ceiling. The floor being my profit and the ceiling being max loss. The cost of the option was $114 per contract so that's my max risk if the option expires at or above the ceiling. (In the screenie, the yellow box is the put spread option and the red/green arrows are my entry.

There was another option available where price was right at the floor. Meaning if price dropped below the floor, I'd be out the $15 per contract I paid for the option and if price ran up, I'd be in profit which would count against the put option loss. $15 for the hedge would be easy enough to eat if price moved in my favor and since this pair can move like a beast, 15 ticks would be easy to absorb. The caveat with this one is that the long side option expired at 7:00 am EST and the short option at 3:00 pm EST meaning there would be a period of time where the short option wouldn't have a hedge. Not a huge deal if price was in my favor. But if price were against me or even flat after the call option expired I'd be at risk. (In the screenie, the green box is the call spread option.)

What ended up happening is a whole lot of nothing until the GBP news hit around 4:00 am and price ran up about 45 pips. The hedge trade was now $35 in profit and the short was -$35 and in the hole. Net B/E which is why I hedged! I let the call spread expire (green x), booked the $35 profit per contract and left the put spread on hoping price would either stay flat or retrace. But now I was unprotected up to the call spread ceiling. Since there wasn't another call spread available that would be a good hedge, I decided the best "option" was decide my cry uncle point was 35 pips up and if price went down I'd get out and still end up net profitable. Price dropped down towards the entry area and started to rise again and I exited and ended up $20 net profitable per contract (bar with the red x). Not bad for a "losing" trade.

Because of my analysis, 149.60 was a good area to short and when price rose back up to that level, rather than go with a spread and need movement to make money, I went with an ATM put binary 149.60 strike @ $53 a contract (max profit $100-$53=$47 contract) with an 11am expiry (yellow arrow). Price got below that level and managed to expiry at full profit of $47 per contract. (yellow x)

Had to do some tap dancing, but seeing what was available, having a plan for best/worst case scenarios, and then executing resulting in profit. The binary win being the bonus on top.

Great example. Thank you!

Last night was a great a setup to do the hedged gbp/jpy again. $97/per bear spread. $18/per bull spread as a hedge. Trade was never in danger. Bull spread expired for $0 at 5:00am Sold the bear spread at 5:30am for $198 netting $198-$97-$18=$83 per contract.

The entry: http://content.screencast.com/users/...0Mar.%2026.gif
The exit: http://content.screencast.com/users/...0Mar.%2027.gif

Last night was also a great opportunity to a deep OTM binary play. The daily pivot was was over 3 strikes away making the nearest strike to the pivot pretty damn cheap. Picked up them up for $13.25 per. Set up an order to close on the touch for $50/per netting $36.75 per.

Green box highlights the central pivot and strike.

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I also shorted GBP/USD in my spot forex account. Price Time Forecast was pretty spot on, eh?

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Here's today's lunchtime trade on the gbp/jpy. ITM put for 149.80 strike. Finished about 40 pips (400 ticks) in my favor for an easy win. I did have to keep my finger on the abort button for a bit there when price kept getting above the level. Again, the beauty of nadex is you just need to be a single tick to win. 400 ticks doesn't net anymore money but saves a few gray hairs.

1 min. chart: http://content.screencast.com/users/...0Mar.%2027.gif
30 min. chart: http://content.screencast.com/users/...0Mar.%2027.gif

Just closed out my daily driving home from work AUDUSD nadex binary option trade. Price coming off the bottom was a no brainer especially with a strike right there. Got home and added on at the pull back. Took profit early even though I think I could have held on to expiration for full payout. But I have a bunch of stuff to take care of and don't feel like baby sitting it.

Entry on the 30 min: http://content.screencast.com/users/...0Mar.%2027.gif
The pull back and exit on the 1 min: http://content.screencast.com/users/...0Mar.%2027.gif

6 for 6 in the last 24 hrs or so.

I've had a call option going on the proshares ultra short nasdaq 100 ETF (symbol QID) since yesterday. It's in profit quite a bit now. Up over 125% and I didn't even get in at a decent price. The price time forecast is dead bang on with it. Options trading on the robinhood app is pretty cool.

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What's cooking JR?

Mostly keeping to myself these days.
I've programmed a bunch of nadex tools in mt4 and excel. On chart price ladder with simulated pricing, box spread tool (soon with pricing), Implied Volatility pivots, Iron condor calculator, binary strangle calculator, binary iron condor calculator, transaction statement reporting tool, blah blah blah.

Just had my best nadex week ever. Are you still doing nadex? I'm more active in my slackchannel. pm me your email addy and I'll add you.

What have you been up to? Still trading nadex at all?

After a several year hiatus from Nadex, I started trading there again at the beginning of this month. So far, so good.

I'll pm you my email.

Awesome. How you trading nadex? binaries? spreads? ITM/ATM/OTM?

I've mostly been doing ITM with ATM thrown in when it makes sense. OTM if I see a setup and room to travel. I also do spreads on the london open, but those haven't been panning out as much as the binaries.

Today I got an Iron Butterfly going on both the EU and GU legging in and pretty much squeezing the entire daily range. My biggest payday ever. Scaled in slowly and got in a lot of contracts since I had a lot of safety in the ranges. Pretty much equaled all of last week and last week was good.