It will be a strong week for earnings reports, especially in the tech sector. Last week, banks reported with results that were largely in-line with expectations.
Covid-19 continues to be a cause of concern as cases continue to explode, especially in the Southern United States. Florida is reporting that some hospitals are out of ICU beds, and the mayor of Los Angeles is considering further shut-downs.
Looking at the markets we like to cover in Nadex, the Euro is continuing to show signs of bullishness against the US Dollar, at least for the short-term. Price has formed a Fry Pan Bottom, and the market is continuing to churn upward above the T-Line (8 EMA) on the Daily Charts.
There is no reason not to stay bullish, unless the EUR/USD closes below the T-Line.
If your short-term bias on the EUR/USD is to the upside, then one way to trade your opinion is with Nadex "Knockout Trades". This allows you to trade your bullish sentiment on the EUR/USD with capped risk. You know exactly what your maximum loss will be before you trade.
Knockout trades have a week-long duration. They start on Monday Morning and expire on Friday. There is also a fixed "floor" and "ceiling" to knockout trades, which defines the maximum amount you can win or lose on the trade.
If you're bullish and price goes through the "ceiling" price level, then the trade is automatically closed for the maximum profit available. Conversely, if price goes through the "floor", then the trade is automatically stopped out for the maximum loss.
Here's a trade I took today (Monday, August 20)
I have a weekly bullish bias on the EUR/USD so here's what I did:
BUY EUR/USD 1.1370 - 1.1620 (250 pip or $250 depth., per contract traded)
Entry Price: 1.1442
Maximum Risk: $75, per contract traded
Maximum Reward: $175 per contract traded (less exchange fees)
Contract Expiry: Friday July 24 at 3pm
What does this all mean?
As long as price is moving above 1.1442, I'm making money. I can choose to exit this trade any time that I want. If it's Wednesday, and I'm up $75.00, then I can exit for $75.00. Conversely, if the trade is moving against me and I'm down $50, I can also close the trade for a partial loss.
Update: Tuesday, July 21
Click on image to Enlarge Chart
- EUR/USD Current Price is staying on the uptrend
- Bought Contract at 1.1442
- Current Price is 1.1459
- Current Profit is $17.00 per contract traded (1 contract in this example)
- Contract Duration: 3 days, 4 hours remaining until expiry.
I'm going to let this trade run. This could set up for a gain of 50+ pips.
Update: Trade Closed Tuesday Afternoon
This trade had a nice run-up today. In today's volatile markets, anything can happen, so I felt an 86 pip reward ($86) was well worth the $72 I put up as risk.Update: Trade Closed Tuesday Afternoon
Conclusion
What I like about Nadex the most is that every trade has capped risk that is known in advance before you place your trade. That's huge in these days of extreme market volatility. It's impossible for a trade to run away from you. No margin calls.
If you're curious about trading with Nadex, download their free demo here. Your account will be funded with $10,000 in play money and you can practice trading with defined risk.
You can fund a Nadex account for as little as $250. Nadex is available for traders in 41 countries.
