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 15-minute 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.
- 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):
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| Click on Nadex Chart to Enlarge |
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:
Trade Details:
Contract: EUR/JPY >132.40 (11PM)
Expiration: Thu Mar 5 23:00:00 EST 2015
Direction: SELL
Quantity: 1
Price: $30.00
Contract: EUR/JPY >132.40 (11PM)
Expiration: Thu Mar 5 23:00:00 EST 2015
Direction: SELL
Quantity: 1
Price: $30.00
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.
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
- Live support
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- Monday, Mar. 9 Directional/Reversal and Scalp Trading Strategies 7pm-8pm EST Register Here
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Watch Krystal Comber Explain the "Sausage & Sushi" Trade:
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Disclaimer
The opinions expressed in this blog are solely those of the author, and should not be construed as trading advice. I am not a registered or certified financial planner. There is a very high degree of risk involved in trading. Past results are not indicative of future returns. All individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice. Information for futures trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein.
