If your work schedule doesn't permit you to trade during normal working hours, here's a trading strategy you can use in the comfort of your home around the dinner hour. For the past month, I've been testing an evening trade with the EUR/JPY that has been remarkably consistent. This strategy for trading Nadex Binary Options came from Krystal Comber, CEO and founder of SlickTrade.net.
The working name used for the strategy was the "8pm-11pm EST EUR/JPY Asian Session" 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 rename it to the "Sausage & Sushi" trade.
Almost every night, the EUR/JPY behaves quite predictably, and if you can draw support and resistance lines,this strategy can greatly enhance your trading consistency.
The rules for trading the "Sausage & Sushi" Strategy are quite simple:
- Log on to Nadex, and select the EUR/JPY currency pair with the "Daily 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. 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 5, 2015):
6:00pm - 8:00pm EST: The EUR/JPY established RESISTANCE at 132.471 and SUPPORT at 132.245. Support and resistance lines were plotted on the chart above at these levels.
8:00pm - 11pm EST: The EUR/JPY ground downward riding below the T-Line (8 EMA) at 8:00, and it breached the support line (132.245) at 8:20pm. This triggered a pending/working SELL order from the nearest NADEX strike price above the support line (132.40).
If a market order would have been placed at the time of the breach, it would have commanded a risk of $85 to make $15. In conversations with Krystal Comber, I learned that the average risk/reward for this strategy is $70 risk for $30 reward. Using this information, the order ticket was amended:
Contract: EUR/JPY >132.40 (11PM)
Expiration: Thu Mar 5 23:00:00 EST 2015
1 contract was sold, with a maximum risk of $70 and a maximum reward of $30. Now it was time to be patient and let the market grind upward to fill the order.
The order filled at 8:55pm when the market moved up sharply. From that point forward, the SELL order was never threatened, moving sideways before it expired and settled safely in the money at 11pm.
This trade yielded a gross profit of $30 per contract, less $1.80 in exchange fees for a net profit of $28.20.
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
Nadex is NOW available to legal residents of the United States, Canada, Mexico, U.S. Territories and 49 more nations. CLICK HERE to see a list of all nations where Nadex is now offered!
Watch Krystal Comber Explain the "Sausage & Sushi" Trade:
If you would like to learn more about Nadex, or how to trade Binary Options, please check out our free video library and learn why this may be an interesting new way for you to diversify your trading portfolio.
CLICK HERE to test drive Nadex with a no obligation, free 2 week demo account!
The Trading Pub Team