Sometimes a good trading strategy needs a catchy name. For the past month, I've been testing an evening trade with the EUR/JPY that has been remarkably consistent. This strategy comes courtesy of Krystal Comber, CEO and founder of SlickTrade.net.
The working name used for the strategy was the "8pm-11pm EST EUR/JPY" strategy. But that's a mouthful to write and it's boring. After testing this strategy with a group of fellow Nadex traders, we decided to call it the "Sausage & Sushi" trade. It's an after dinner trade that can be quite tasty.
Almost every night, the EUR/JPY behaves quite predictably, and if you can draw support and resistance lines,this strategy can help enhance your trading consistency.
The rules for trading the "Sausage & Sushi" Strategy are quite simple:
Select the EUR/JPY currency pair with the 11pm expiry.
At 8:00pm EST, draw horizontal lines at the highest price (resistance) and the lowest price (support) between 6-pm-8pm on the hourly chart for the EUR/JPY. Draw your support and resistance lines on regular candle bodies, and not the wicks. I use regular candlesticks, and not Heiken-Ashi candlesticks.
Switch over to 15 or 30 minute charts.
Be aware of any economic news occurring on the EUR
or JPY from 6pm – 11pm EST. Refer to Investing.com or Forex Factory to view economic news.
For a SELL – After 8pm, if a candlestick closes below the 6pm-8pm support line, then SELL on the closest strike price at or above the support line. You can place a market order if you want your order filled immediately, or you can place a working/limit order if you want to adjust your risk/reward. If you want an additional margin of safety, you can place a working order at the next strike price up the strike price ladder and hope that the market comes back to fill your order.
For a BUY – After 8pm EST, if a candlestick closes above the 6pm-8pm resistance line, then BUY at the closest strike price available at or below the resistance line. You can place a market order if you want your order filled immediately, or you can place a working/limit order if you want to adjust your risk/reward. If you want an additional margin of safety, you can place a working order at the next strike price down the strike price ladder and hope that the market comes back to fill your order.
That’s it! Price is normally tested heavily
between 9pm – 10pm EST –You may wish to walk away during this point and come back
around 10pm -10:15pm EST.
Always pay attention to the trend direction and news.
If the market is sideways and staying within the high and low range you may want to avoid taking the trade. This is why I like to watch the Keltner Channels and
Fisher Transform on ThinkorSwim (TOS) or the EMAs and Ichimoku cloud on the Nadex charts.
Let's take a look at last night's "Sausage & Sushi" trade (March 1, 2015):
6:00pm - 8:00pm EST: The EUR/JPY established RESISTANCE at 133.919 and SUPPORT at 133.702. Support and resistance lines were plotted on the chart above at these levels.
8:00pm - 11pm EST: The EUR/JPY breached through the resistance line briefly at 8:05 and 8:10, but the candlesticks never closed above resistance. I call this a "soft breach". Resistance was tested twice, but it wasn't a confirmed breach until a candlestick closed above the line. The early "soft breach" gave me a stronger bias that a breakout to the upside was likely to occur. The decision was made to place a working/pending order at 8:12. At that time, the current market for a BUY order was $68.50.
Contract: EUR/JPY >133.80 (11PM)
Expiration: Sun Mar 1 23:00:00 EST 2015
1 contract was bought, with a maximum risk of $60 and a maximum reward of $40.
The order filled at 8:25pm when the market dropped to the low point of the session. The market gradually continued to grind its way upward. At 9:15pm, a candlestick finally breached and closed above the resistance line. From that point forward, the BUY order was never threatened, and it expired safely in the money at 11pm.
This trade yielded a gross profit of $40 per contract, less $1.80 in exchange fees for a net profit of $38.20.
In backtesting, demo trades and now a few live trades, I am learning to trust this strategy because it has been remarkably consistent.
About Krystal Comber:
Krystal is the founder of SlickTrade.net. SlickTrade provides live trading rooms, signals and setups for Nadex, IG Group and Forex traders. Krystal provides the following services:
- Video tutorials for trading with Nadex
- Winning strategies with detailed instructions
- ThinkorSwim (TOS) workspace setups and indicators
- Live trade signals
- A private Facebook group and chat group
- A personalized online trading journal that helps you track your trading activity
- Live support
Watch Krystal Comber Explain the "Sausage & Sushi" Trade:
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The Trading Pub Team