10 pips

OptionGuru · Apr 6, 2016

Cris76 said:
Hi,

Thank you all for your comments.

I can achieve 10 ticks 80% of the time. Each trade if open, is closed within the daily candle. Frequency is about 2 trades a week per currency pair.

As stated at the start, my problem is that (as many other strategy), the stop loss kills the profitability of this strategy.

If I consider 10 trades this would be the equivalent in the spread betting market (forgive me that's where I have been trading)

10 pips - spread 1.5 (and slippage) x 8 wins = 68

30 pips - spread 1.5 (and slippage) x 2 losses = 57

More or less I will need 30pips SL. The problem is that with a 30 pip stop loss I will not achieve 80% winning.

I have an idea on how to adjust this in the spread betting (and results are not attractive) but I wondered if can apply a method that can achieve 80% success of securing 10 pips (ticks) in the underlying currency pair applied to the option trading (hence no worries of being stopped out) can be profitable.

Binary options will not allowed to make money on such a small movement and the pay-out is less then the investment (so the SL>TP).

I thought that perhaps by buying a ITM option knowing that the price will move 10tick within the next few hours (before the close of the daily candle for sure).

But I am not an expert so I needed advices whether this sound possible considering the cost and commission of getting in and out of a trade + if such a movement in the underlying is too small to make a profitable impact in the price of the option.

If I have applied and back tested (+10years) this breakout strategy and has always achieved between 80% win ratio on most of the currency pairs.

I somehow though I came across something valuable as knowing that at some point during the day I can predict with good accuracy that the price will move for an extra 10 pips within the end of the day. I just do not know when exactly will get to the +10 level. Might move in the opposite direction for a while. Also after hitting the +10 price, it might move back. Hence the strategy is getting in and out at those two levels.

That's all. Just wanted to figure out if there is an instrument that allow this strategy to make money! (I guess we all try to achieve this)

Sorry for the long description but I felt I needed to provide a little more info and clarify few point, mainly that I try to have a strategy with no Stop Loss, hence my interest in Option Trading.

Thank you for your time again and I will try to learn more about Options.

Cris
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Cris76 ....... No trading instrument that use PIPS as a measure of price movement offer options for that instrument.

Swan Noir · Apr 6, 2016

OptionGuru said:
Cris76 ....... No trading instrument that use PIPS as a measure of price movement offer options for that instrument.

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Swan Noir · Apr 6, 2016

I don't trade FOREX but I suspect that trades that work in that market (I don't think this one works in any market) can frequently adapted to work in the futures market.

Visaria · Apr 6, 2016

OptionGuru said:
Cris76 ....... No trading instrument that use PIPS as a measure of price movement offer options for that instrument.

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Currency movements are measured in PIPS. Currency options exist. Therefore your statement is wrong.

OptionGuru · Apr 6, 2016

Visaria said:
Currency movements are measured in PIPS. Currency options exist. Therefore your statement is wrong.

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Measure of price movement.

Forex = Pips

Futures = Ticks

No options for Forex, but there is options for Futures including Currency Futures.

Visaria · Apr 6, 2016

Huh? the forex option market is HUGE. Might be the biggest option market in the world!

Visaria · Apr 6, 2016

oh yeah, forgot:

Xela · Apr 6, 2016

Swan Noir said:
I don't trade FOREX but I suspect that trades that work in that market (I don't think this one works in any market) can frequently adapted to work in the futures market.
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Indeed so: if it has an edge on spot EUR/USD, it has an edge on Euro futures.

K-Pia · Apr 6, 2016

OptionGuru said:
Cris76 ....... No trading instrument that use PIPS as a measure of price movement offer options for that instrument.

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You are nitpicking.

OptionGuru · Apr 6, 2016

Xela said:
Indeed so: if it has an edge on spot EUR/USD, it has an edge on Euro futures.
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One of the main differences of Forex over Futures is the margin required to trade. A Forex account can be less than $1000, while a futures account could require about $2000+.

K-Pia said:
You are nitpicking.
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No ..... I am not "nitpicking".