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.
- 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.
- 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. Also if the spread between 6-8pm support and resistance is very skinny, it's best to stay away from this 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.
Last night's "Sausage & Sushi" trade (March 25, 2015) presented a good OTM opportunity:
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| Click on 5-Minute Nadex Chart to Enlarge |
8:00pm - 11pm EST: Within the first 15-minutes after 8pm, the EUR/JPY broke through the support line, gapping hard below the T-Line (8EMA). Using the rules of this strategy, this triggered a pending/working SELL order from the nearest NADEX strike price above the support line (131.00).
There were 2 SELL strike prices to consider:
- SELL at 131.20: This was the safest strike price, but it was very deep into the money. If a market order was placed, it would have required risking $92.50 for a $7.50 reward. I placed a working/pending order risking $70 to make $30. For this order to fill, it would require the market to move upward significantly for a fill. With almost 3 hours left in the trade, anything is possible.
- SELL at 131.00: This order was much riskier, since the support line was barely below this strike price. The market price for a SELL order was $45. meaning I was risking $55 to make $45. While those are better risk/reward odds, the market was straddling that line, and it felt a little too risky.
Sometimes you just have to trust the strategy. After 2 months of trading the strategy, the rules hold up with great frequency. The decision was made to SELL at 131.00, but a working/pending order was placed, risking $40 to make $60.
Trade Details:
Contract: EUR/JPY >131.00 (11PM)
Expiration: Wed Mar 25 23:00:00 EST 2015
Direction: SELL
Quantity: 1
Price: $60.00
Expiration: Wed Mar 25 23:00:00 EST 2015
Direction: SELL
Quantity: 1
Price: $60.00
1 contract was sold, with a maximum risk of $40 and a maximum reward of $60. Now it was time to be patient and let the market grind upward to fill the order.
The order filled at 8:42 pm when the market moved up sharply. From that point forward, the SELL order was never threatened, except for a brief period at 10:10pm. The market moved back down and traded sideways before it expired and settled safely in the money at 11pm.
This trade yielded a gross profit of $60 per contract, less $1.80 in exchange fees for a net profit of $58.20. The pending order at 131.20 never filled.
In backtesting, demo trading and now 2 months of live trades, I am learning to trust this strategy because it has been remarkably consistent. A sincere thanks to Krystal Comber for sharing this strategy. If you can draw support and resistance lines, you can trade the EUR/JPY "Sausage & Sushi" trade tonight!
The order filled at 8:42 pm when the market moved up sharply. From that point forward, the SELL order was never threatened, except for a brief period at 10:10pm. The market moved back down and traded sideways before it expired and settled safely in the money at 11pm.
This trade yielded a gross profit of $60 per contract, less $1.80 in exchange fees for a net profit of $58.20. The pending order at 131.20 never filled.
In backtesting, demo trading and now 2 months of live trades, I am learning to trust this strategy because it has been remarkably consistent. A sincere thanks to Krystal Comber for sharing this strategy. If you can draw support and resistance lines, you can trade the EUR/JPY "Sausage & Sushi" trade tonight!
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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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.
