Diagnostic Analysis: Planning The Trade

What is diagnostic analysis? According to Darrell Martin of Apex Investing Institute, it is the heart of diagnostic trading. He uses everything from fibonacci levels, support and resistance to magnet levels, highs and lows and deviation levels in order to find out where the orders are. He wants to know where the high probability zones are going to be and where the markets are going to go.

On October 17, 2014, on the Bull Bear Binary Option Hour, a radio show on TFNN, Martin used this diagnostic analyses in order to identify entry and exit points for a trade he hoped to have filled on the S&P 500 (ES) during the show. He had placed his order, waiting for the market to reach 1892 where he wanted to go short. The 1892 was called before it was hit during the radio show.

Martin has another radio show that he does daily, The Diagnostic Trading Hour, on TFNN two hours later. On his program this day, Martin explained that his order had been filled at 1892 and he had his stop set at 1897. He had set his first take profit at 1889 and his next take profit at 1872. He was looking for a bounce at 1872, because that was also a deviation level. This would signal a good place to get out of the trade. This trade was done on futures, but using the same diagnostic analyses, this trade could have easily been performed on a Nadex spread or binary option.

It is important to read the future charts and know what the expected moves might be when choosing derivative options, like Nadex, to make a trade.

As Martin presented further information about the trade, it was shown that it had dropped to 1883. At that point, he suggested that it would be alright to lock it in at a nine point profit, even if you would be giving up a little bit of your profit. Your profit would be $270.

Martin considered the possibility of hedging. He pulled up the Spread Scanner that is available at Apex Investing Institute, explaining that using a spread as a hedge now would be something you would use instead of a stop. This would be a spread to protect your profit. He pointed out that a trailing stop is always risking some of your profit. If you have a stop and the market goes up, barely nicks your stop, but takes you out of the trade, then you lose some of your profit and you have to decide if you want to risk more money to get back in the trade. Now that might be something you are willing to do. A hedge can also be done using a binary. After searching what was available at the time, Martin decided to stick with the trailing stop he had in place.

The market continued moving down, reaching the next take profit of 1872. Because this trade was done on futures, and that was a 20 point move, it was a $600 profitable trade, excluding exchange fees.

If you would like to know more about placing trades like this on futures, Nadex spreads or binaries, go to www.apexinvesting.com, a service provided by Darrell Martin. Apex Investing Institute offers free education, and free access to the Nadex Binary and Spread Scanner Analyzers. Member traders are invited to trade in the chat rooms, take advantage of trade signal services, have key indicators and access the Apex Forum. The forum content is updated daily and includes over 9000 members. In a supportive learning community of seasoned as well as up and coming traders, traders of all levels learn how to trade Nadex binaries and spreads in depth, as well as futures, forex, stock and options, and gain an edge for successful trading overall.

Posted In: Binary OptionsEducationEurozoneFuturesCommoditiesOptionsForexSuccess StoriesMarketsGeneralapexinvestingbinarybinary chartsbinary optionsbinary scannerbinary signalsdarrell martinday tradinghow to tradenadex binariesnews release tradesnews trading ideasnorth american derivative exchangepost newspremium collectionprenewsscalpingspike strikerspread optionsspread scannerThe Better Betweekly options
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...