Where in the holy crap have I been, people? Well since no one reads this blog anyhow, I am going to share a few secrets today. I don’t have to worry about the world finding my secret sauce because it’s not really any secret. It is my holy grail but it is nothing that has not been around for a long time.
You see, I have been in search of a way to trade where I would not have to use stops but I would have no risk either. When I speak of risk, I am not talking about losing 10 or 12 pips, I am speaking to those times when you get into a trade (with no stop) and then manage to lose 1000 pips in a week when you were absolutely sure there was no way that could happen.
I have found my way to trade with no stop and not worry. I assume this is my holy grail….The act of not worrying about my trade with no stop.
Many, who do not understand what I will speak of, may spew some kind of crap out of their mouths like… “If you trade without a stop, you are flirting with disaster!” This is because they do not understand. Many who do understand what I will speak of will say, “Well done on finding your way.”
Now I have to retract a statement I made a few months ago because now I realize it may be bullshit. Here is the recall….I don’t remember if this was in the interview or if it was off air but I do remember telling Rob Booker that I thought NADEX was a scam. I want to redact this statement. I will tell you why…
First, I must tell you why I thought it was a scam in the first place. I have seen all the ads for brokers in sneaky no name countries that state anyone can win a thousand dollars a day with binary options. I had it in my head that binary options = SCAM! Therefor I never even took the blindfold off and looked at Nadex with an open mind.
OK I am not going into a sales pitch about them but here is a small tidbit. They offer binary options and bull spreads. What is a bull spread? A bull spread is a derivative of an options market contract and it goes something like this…
Lets pretend price of whatever is 1.3000 at this current moment in time. Now as we all know, price moves up and down. What if I placed a long trade and it went 200 pips against me in the next 8 hours. How much would I lose or be in a drawdown by? 200 pips.
Ok lets say I placed a trade a little differently. Lets pretend I buy a bull spread. I pay a premium for it so instead of my normal 2 pip spread, I have to chunk over a 15 pip spread. Now I place my long trade and price moves 200 pips against me in the next 8 hours. How much do I lose? 15 pips max.
Price can go 1000 pips against me and I still can not lose more than 15 pips on this trade. Now I have picked 15 pips as an arbitrary number. It could be 10 pips or sometimes 20 pips, depending on volatility but the simple fact is I can only lose a small small portion.
AND NOW MY SECRET SAUCE!!!!!!!
What happens if I place a 2 lots long on the nadex bull spread with a 15 pip spread and 1 lot short on the underlying? No matter what direction the market moves, as long as it moves beyond my spread in the next 8 hours, I make money.
Ok folks thats it. You can figure your own way from here.
ps- Don’t be stupid and take my word for it because if you just do the above, you will lose. Check out and do your due diligence before placing any trade.