Binary Options Trading for July 5, 2013: 2/4 ITM

I took four trades on the EUR/USD on Friday, winning two. It was also a non-farm payrolls (NFP) day, which provides a general statistical outlook on the state of the U.S. labor market. But as I stated in my NFP post from last month, I don’t actually trade the release of the news. The bulk of the market action occurs within the ensuing seconds following the release of the report. By the time you check the news, determine which direction the market should go in, pull up your broker, type in the investment amount, click the direction arrow, and hit submit, it’s likely that you’re going to get in at a price level far from where it was at the beginning of the minute (i.e., when the report was actually released). Moreover, over a year ago I remember trying to trade the release of the NFP on 24option, and the market was moving so fast that I wasn’t even able to get my trade order filled. But I’m not suggesting at all that my opinion toward (not) trading the NFP is correct. I’ve heard of several binary traders who like to take advantage of the news release. But I simply disregard it.

My first trade on Friday occurred at around 3:00AM EST. I had 1.28907 (top red line) marked off as an area to look for call option set-ups. The market had consolidated there for four consecutive candles and re-touched on a dip back to that price at 2:15. Once 1.28907 was rejected on the 3:00 candlestick, I touch a call option on the re-touch of that price on the 3:05 candle. Unfortunately, this trade never did produce any type of bounce and wound up as a six-pip loss.

My next trade came down at 1.28841 from the minor support level that had formed just after 3:00. I took a call option on the 3:50 candle after the rejection of the price level on the previous candle. This trade lost, as well. It was in the red most of the time, and while I thought it might climb back above and hold above my entry point toward the end to give me a winner, it fell back through and gave a loss of just over a pip.

In retrospect, this trade wasn’t the best set-up. I don’t necessarily regret taking the trade in and of itself, as not all set-ups are going to be ideal, but fighting a clear downtrend for the morning was risky in addition to the fact there had been some clear downward momentum on the previous candle despite the wick. Truly the only factor I had going in my favor on that trade was the support level, which was nothing special in itself. Although no two trade scenarios will ever precisely duplicate themselves, I can take this one as a learning experience (i.e., don’t take trades at a weak support or resistance point against a conspicuous trend).

I did not find a trade for another couple hours. From 5:00-6:00, price consolidated in a channel between 1.28804 and 1.28715. I was able to obtain my first winning trade of the day by taking a call option at the bottom of the channel on the 6:05 candle after price once again closed above 1.28715 as it had repeatedly for about a half hour just after 5:00. Again, this was another trade against the prevailing trend, but I definitely had a stronger area of support going for me on this set-up. The bottom never did fall out of this trade and I ended up with a winner of just over six pips.

My final trade came soon thereafter at the very top of the channel. This was my strongest set-up of the day. I finally took a trade with the trend clearly going in my favor and I also had a pretty robust level of resistance working for me, as price had bounced off of 1.28804 on several occasions in the past ninety minutes. I took the trade on the 6:25 candle, as the touch and rejection on the 6:15 candle served as sufficient price action confirmation for me to take the put option. This trade won by just over a pip and closed just in time, as it flew back above my entry just after expiration.

With that, I decided to be done for the day. I also try to avoid trading within the first hour or so before the release of the NFP. I’ve found that the markets tend to not act as “rationally” when nearing the big news release as they do in other times. Usually there’s some choppy movement and indecisiveness in the market and this reflects in the price action, which is understandable as nobody really knows the aggregate figure to be reported aside from a select few who work in the U.S. Bureau of Labor Statistics.

Overall, this wasn’t a net profitable day at just 50% ITM. But I was very happy with how the week went overall (10/13 ITM) thanks to strong results in the first two days I traded.

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