Short term chart patterns are extremely common in markets and notoriously hard to trade successfully, until you become familiar with Nadex Binary options. Thursday, a double bottom formed on a 30 minute ES chart. Normally, the reliability of our adjusted double bottom pattern is very high, but the shorter the time frame of the chart where the pattern appears, the lower the probability of the target being reached before a quick move hits the stop loss. The short term patterns, however, are often trader’s favorites, as the fast moving nature of these charts satisfies the “instant gratification” gene that most traders possess. Binary options solve this problem.
The underlying US 500 index was shown at approximately 1899.00 and the target of the pattern was 1903.50, as represented by the black horizontal line on the attached chart.
One could purchase the >1903 Daily (3PM CDT) binary for a cost of about $30.50 when the pattern triggered, leaving a potential profit of $69.50. The 12:00 noon CDT expiration was even cheaper. Normally this would NOT be a prudent trade, since the presence of a strong moving average on a short-term chart can provide strong resistance, potentially causing a stop out prior to the ultimate move, but the all or nothing nature of binary options and the positive reward to risk ratio of this trade made it a trader’s choice. In straight futures market, this potential trade should be rejected. In Nadex binary options, this trade pays for a nice chicken dinner for you and your significant other. Now if only she wasn’t a vegetarian.
Futures, options and swaps trading involve risk and may not be appropriate for all investors. Past performance is not necessarily indicative of future results