In today's trade, a 20-minute binary option was placed on the US 500 index for the time period of 3:20-3:40 EST.
The US 500 had been on a brief uptrend and the indicators used to determine the direction of the market were largely in agreement that the market was going to continue to be bullish for the next 20 minutes:
- The candlesticks were riding above the T-Line (8 EMA) on the 5-minute chart (bullish)
- The candlesticks were above the 50 period MA on the 5-minute chart (bullish)
- The market was moving above the 1-minute Ichimoku cloud (bullish)
- Slow Stochastics (12, 3, 3) were overbought, but not tailing down (neutral/bearish)
As soon as the session opened, a pending/working BUY order was placed deep into the money at >2034.75, risking $50 to make $50. This order stood very little chance of getting was filled, but was placed in the event of a sudden market reversal.
The market ground its way up, before making a Sharp reversal at 3:25. Another BUY order was placed at >2040.75. But this time the trade was out-of-the-money, risking $20 to make $80 per contract. This order filled.
Within four minutes, the market climbed above 2040.75 and the contract showed a profit of $33.00, with 8 minutes remaining in the trade. The decision was made to take profit and exit the trade. As it turns out that was a wise decision. For the trade to expire in the money, the contract had to settle greater than 2040.75. It expired exactly at 2040.75, which would have resulted in a $20 loss.
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The Trading Pub Team