Trading Nadex Binaries in Range Bound Markets

Let’s assume it is a slow day in the markets. Nobody has any reports to give or it is lunchtime. Maybe there’s a lot of news scheduled for release later, but right now the markets are basically flat. What can you do if you trade Nadex binaries? A favorite trade of many traders is the binary butterfly. Sounds nice, doesn't it?

The idea behind doing a binary butterfly is to enter into two contracts on the same instrument with the same expiration time. You buy one that has a low strike price and you sell one that has a higher strike price. When you do this, you are saying that at expiration, the price of the underlying market will be between the two strike prices. If you’re staring at your charts and the market price seems to be staying in a channel, then it could be the right time to look for a binary butterfly.

When you look for this opportunity, you want a profit of $15-25 on each side. If you are correct in your trade, you will profit on both sides. Another thing to take into consideration is how the market ticks, because this will affect the width of your butterfly. A common misconception is that wider strikes will make more money. Wider strikes with more time until expiration do not provide a greater probability of winning than narrower strikes with less time to expiration. The pricing of the Nadex binary considers the probability based on implied volatility of events and expected movement between the current time and expiration. All of that is built into the pricing, but that is not all to consider when choosing the range for your butterfly. There’s a great tool to use at Apex Investing Institute which is the Expected Ranges Indicator. Using this tool, you can adjust where it starts and stops on your entry time as well as your chosen expiration time. This will tell you what to expect for movement to allow you to accurately pick the correct strike prices. You can then see if the binary prices you were considering are justified.

Below, you can see an example of a narrow Nadex binary butterfly done on EUR/USD. It was a mere 20 pips wide. This was a quick trade, closed before expiration, and very profitable.
To view image click HERE

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To view image click HERE: 25s_image_1

The image above shows another type of trade you can do when it is a flat market which is the Spike Striker ITM Aggressive strategy. When you do this strategy, you don’t wait for the trade to break the high/low, you just take the trade. Because it is in a flat market, it may never break the high/low. You get in on a strike regardless if it breaks the high or the low of the bar that was confirming the spike. Since you won’t be waiting for a confirmation bar when doing the Spike Striker, you can expect a couple of losing trades. That’s your disadvantage. But your advantage will be that you’ll pick up a lot more winners in flat markets that wouldn't even get to touch had you not employed this more aggressive strategy. It’s important to pay attention to what the volume is doing. If there's big volume, you’ll probably want to wait to enter the trade. In order to do this strategy well, volume needs to be about normal: a little below or a little above. Because this is an aggressive strategy, know what your trading temperament is. For more information on this, see the series of articles about trading personalities HERE. (Link sheep, pigs…)

These are just two ways you can trade Nadex binaries in range-bound or flat markets. There are other ways to trade binaries in other types of markets. To learn about these strategies, 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 rooms, take advantage of trade signal services, have key indicators and access the Apex Forum. The forum content is updated daily and includes over 7000 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 binariesnorth american derivative exchangepremium collectionscalpingspike strikerspread optionsspread scannerThe Better Betweekly options
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