Digital derivatives markets

Digital derivatives marketsThe Weekly Update: Prime Focus is on EURUSD and EURCHF

EURCHF 1.2000 Floor is At Risk

As we have successfully predicted at the end of August, EURCHF weakness was inevitable. It is important to understand that the reason behind the fall is due a referendum that has been scheduled to take place in Switzerland on the 30th November. Save Our Gold, a referendum that will force the Swiss National Bank (SNB) to increase its gold reserves to 20% over the course of 5 years, To buy the gold, the SNB may use its fiat currency reserves, possibly EUR and USD, which will mean the central bank would be selling Euros rather than buying that will lead to the meltdown of the EURCHF floor.

Little attention is still begin paid to the referendum as the latest polls suggest a NO vote at the time of this writing. Even if the referendum passes it must still be approved by the Cantons, which may not occur as they are benefiting from dividends from the SNB, which may be affected if the referendum passes. In the worst case scenario, printing new money for buying gold is still an option although we believe it is highly unlikely at the time of this writing. In our view, the reason why the SNB failed to intervene to protect the floor is not to spark headlines that would tilt the polls to the YES camp. The SNB has layered orders in EURCHF to protect the floor, which has held so far at the time of this writing. In our projection for EURCHF, if the central bank does not intervene the floor would be breached and billions-worth of stop loss orders will be triggered. If the SNB will intervene, the headlines are likely to affect the polls, shifting more voters to the YES camp, which will force investors to downsize their CHF short trades that will strengthen the Swiss Franc (CHF) against a basket of currencies. As a result, EURCHF floor will be breached, We will continue to monitor Euro-Swiss and post updates at the bottom of this page when found relevant. Subscribe to be updated when on our latest trade updates and market research,

EURNZD Technical Analysis

Out focus for this week will be on EUR/NZD as our technical models suggest a bullish reversal is imminent. For our analysis we have used the weekly chart, which determines a bullish trend is expected in the FX cross. EUR/NZD painted a reversed Head-And-Shoulders (HS) where the key support is seen at 1.5748, levelling with the left-hand shoulder of the reversal pattern. To concrete the left-hand shoulder, the 21 Daily Moving Average (MA, in green) was able to contain any further weakness in the cross. When the price first tested the 21DMA Euro-Kiwi gained over +300 pips in a single week.

EUR/NZD Weekly Chart

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Aside the reversed HS we also noticed an uptrend has been established from Septembers lows, posting higher highs and higher lows. The current dip is the second higher low, which could also be the second wave. If our trading strategy is correct, EUR/NZD should trade over 1.6220 within the next 45 days. We have decided to place a conservative take profit at the HS neckline (1.6220) but it is subject to change in accordance to the progress of the trade. Subscribe to DDMarkets to be instantly updated when a modification is made our open trades in global markets. Although it is not our take profit, the 100% objective of the reversal should be near the 200DMA (in brown), currently at 1.6410. The protective stop loss order is layered at 1.5695 for the long trade, maintaining a decent Risk-Ratio (RR). As the Forex market is closed at the time of this writing, we will issue an update regarding the entry at 22:00 GMT.

From a fundamental angle, we believe the Global Dairy Trade (GDT) results on Tuesday, 18 November 2014 may be the trigger for the expected gains in Euro-Kiwi. There is a correlation between dairy products data and NZD. Fonterra, a co-operative group established in New Zealand and owned by over 10,000 farmers is responsible for more than 25% of global dairy exports. Fonterra revenue exceeds NZD 19 billion per annum. Any price changes in dairy products will affect Fonterras revenue, which will in turn affect the New Zealand Dollar. If the results of the GDT will show declines in dairy products it is possible the Kiwi will be heavily sold in the FX markets, inline with our EURNZD trading strategy. You may view the official GDT results at this page.

EURUSD Technical Analysis

In our previous EURUSD analysis we have maintained a bullish outlook for the pair although our protective stop was triggered at the entry after booking profits. We have discovered an intraday entry in Euro-Dollar based on the 4hr chart. Following the recent gains on Friday, which some suggest is as a result of stops being targeted by the market has caused the price to close above its 4hr resistance (black line), indicating further gains are due.

EURUSD 4hr Chart

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The Japanese shooting star, held by the 100MA (in green) is warning that a retracement to the recent gains is possible. It is insufficient to execute a short trade as not all our technical indicators are inline with the shooting star, however, exercising dip-buying strategies may be a better approach. We estimate 1.2477 1.2495 to be the range for the long order. We are placing our long entry order (buy limit) at 1.2485, layering the protective stop loss order at 1.2448.It is possible the retracement may continue towards 1.2465 before rebounding. As this is not guaranteed, we are willing to incur the drawdown should such a scenario materialize. Our target for the long trade is 1.2580 with a RR of 1. 2 (approx.). If the market price trades above 1.2546, the entry order should be terminated and our trading strategy for EURUSD will be revised.

Key Economic Figure

Aside the GDT data due on Tuesday, European Purchasing Managers Index (PMI) on Thursday is the key economic data for this week. The heavy selling on the yen as a result of the Bank of Japan (BOJ) decision to boost its Quantitative Easing (QE) program, which drove USDJPY above 116 will be countered by the Bank of Korea (BOK) as the central have said in the past the weak yen is having a negative effect on the South Korean economy. We are eagerly waiting for a short, technical entry in USDJPY that may suggest such actions from the BOK are due. Following recent FX intervention by the Reserve Bank of New Zealand (RBNZ), we believe if the yen will continue to tumble against the Korean Wong (KRW), a direct FX intervention is not theoretical.

17/11/14 UPDATE: The FX markets opened and EURNZD gapped lower to trade at 1.5741 at the time of this writing, We are executing the long trade at market price and modify the protective stop loss order from 1.5695 to 1.5670. The long trade has an improved RR due to the trading gap. A trade update was sent to all subscribers.

17/11/14 UPDATE II: EURNZD is trading at 1.5795 at the time of this writing. We are closing 10% of the long trade at market price.

18/11/14 UPDATE: Altering the protective stop loss order was a good call as EURNZD traded at 1.5677 before rebounding to current levels, 1.5805 at the time of this writing. As we have predicted, the GDT data weakened the New Zealand Dollar across the board (results: -3.1%). We are closing 20% of the long trade at market price and shift the protective stop loss order to the entry.

EURUSD trade was not in play as the market traded above 1.2546 before retracing lower, which highlight would negate our technical strategy for the currency pair.

19/11/14 UPDATE: EURNZD is trading at 1.5942 at the time of this writing, almost +200 pips profit. We are closing 25% of the long trade at market price and shift the protective stop to 1.5850.

EURNZD Weekly Chart (current)

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You may see how the right-hand shoulder is being painted at the time of this writing. You view may view our latest market analysis on the homepage and subscribe to be notified on future market updates.

21/11/14 UPDATE: In light of the Peoples Bank of China (PBOC) recent actions (rate cut), NZD and AUD posted marginal gains in the FX market, triggered the protective stop in EURNZD. We were able to realize a decent profit from the trade while capitalizing over crude oil. ensuring a decent profit is maintained.

Crude Oil Technical Analysis: Corrective Gains From Current Levels

Crude Oil Technical Analysis

After sitting on the fence on Mondays session, we believe we may have found an attractive entry in crude oil following the heavy losses that were anticipated in our prior crude oil trading strategy. The effects of weak crude oil prices rippled through global markets, forcing the Central Bank of Russia (CBR) to act in the FX markets and raise the interest rate from 10.5% to 17.0% to contain the Russian Rouble (RUB) from depreciating against a basket of currencies. Based on our market analysis, we are not foreseeing a full recovery in crude oil prices but corrective gains before a resumption of the downtrend as the price reached its key support on a monthly level.

China have taken moderate steps to boost the economy, which are likely to reflect in its economic figures in the first quarter of 2015. We also bear in mind profit realization to become more dominant in the market as we approach the end of the year. These are sufficient fundamentals that may force crude oil to post corrective gains across the board. Another possibility, although it is highly unlikely, Iran may verbally intervene in the market by bringing the Strait of Hormuz on the table. Previous threats to shut down the strategic Strait of Hormuz caused a gigantic bullish spike in WTI crude oil and Brent. Iran have stated they will take steps in what they consider a plot against the Iranian regime as the Iranian economy greatly depends on crude oil exports. We would highlight that this is against our views as we believe this is a joined-effort to dent ISIS profits from smuggling crude oil to nearby regions.

Crude Oil (WTI) Monthly Chart

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The orange line indicates the key support that was violated by the market bears. Upon a successful breakout, the bears pushed through multiple layers of support levels, assisted by Saudi Arabia and OPECs decision not to interfere in the market. 55.0 (in blue) holds a moderate support level that we believe will hold and give birth to a bullish, technical correction. With technical indicators oversold in multiple time frames, it is difficult to entertain a scenario where heavy losses will be seen in the remaining days of 2014.

We are setting 70.0 (in green) as our target for the long trade in which we would expect to reach within the first quarter of 2015. The latter resistance is noted at 86.40 (in black). The bearish target for the long-term downtrend that originated from the monthly breakout is seen at 36.0 but it is subject to change as a technical confirmation would be required after the anticipated gains. The protective stop loss order is layered at 50.0. It is not a tight stop but bearing in mind this is a monthly entry we find it rather attractive as a decent Risk-Ratio (RR) is maintained. To summarize, we are executing the long position at market price, protective stop layered at 50.0, setting 70.0 as a our take profit.

We will be issuing updates regarding the long trade at the bottom of this page. If you wish be notified when an update is released we recommend to subscribing to us, which is completely free.

Near-Term Risk

The near-term event that may trigger certain volatility in the market is the Fed monetary policy meeting on Wednesday at 19:00 GMT where the economic projections will also be released. There were continues talks of a rate hike by the Fed, which had previously lead to a strong US Dollar (USD) in the Forex market. It is no secret the weak USD was a large contributor to the US economic recovery. There is a fair possibility the Fed may change the tone in its Federal Open Market Committee (FOMC) statement that will cloud the expectancy for a rate hike, which will favour a weak USD, inline with our long trade in crude oil and EURUSD .

Another event is due from China on the 19 December, 2014. The National Bureau of Statistics (NBS) announced in a press conference a revision of 3.0% will be made to the Gross Domestic Product (GDP) in 2013. However, the NBS did not clarify whether the GDP will be revised higher or lower. A higher revision may trigger the risk appetite mode in the global markets, which may serve crude oils recovery as we have clarified in our trading strategy for the commodity.

17/12/14 UPDATE: Crude oil is trading at 57.00 at the time of this writing. Although we are expecting further gains at the FOMC statement (19:00 GMT) we are closing 10% of the long trade at market price.

17/12/14 UPDATE II: In light of the heavy buying in crude oil (currently trading at 58.30) we are closing 15% of the long trade at market price.

18/12/14 UPDATE: Crude oil is trading at 58.09 at the time of this writing. Although by the book we the protective stop should only be adjusted by the end of the month we are concerned risk-aversion mode will be triggered from Greece, We are therefore shifting the protective stop to the entry and close 20% of the long trade at market price.

23/12/14 UPDATE: We were stopped out at the entry as crude oil corrected lower, trading at 55.36 at the time of this writing. We made a note of the weekly hammer, patiently waiting for a lower price to enter the market. Although the Greece Presidential elections are due on Tuesday, a weekly entery tends to be a fairly strong entry to the market.

Crude oil Weekly Chart

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We are executing a long trade at market price, protective stop layered at 52.00, targeting 71.35.

23/12/14 UPDATE: Crude oil is trading at 56.66 at the time of this writing following the US Final GDP figure. W are shifting the protective stop to the entry and close 20$ of the long trade at market price.

intense_alert font_color=#f7f4f4″ border_radius=5px shadow=1″]As crude oil trade is closed it can now be accessed by all traders. Open trades are restricted to members only. We have been providing trade alerts (signals) since May 2014, documenting all our trades on the website and summarize them in the Trades Performance. Sign up for one of our plans to access our current and future trade alerts.[/intense_alert]

Crude Oil Outlook November 2014

Crude Oil Outlook: Politically Correct

Crude oil suffered from hefty losses across the board following Saudi Arabias decision to cut oil prices in the US in an attempt to boost its share in the US market. Since then crude oil prices (WTI and Brent) extended their weakness, raising concerns amongst global investors. On the 27 November, 2014 the Organization of the Petroleum and Exporting Countries (OPEC) will convene in Vienna to discuss the recent fall in crude oil prices. In the following analysis we will provide our trading strategy and predictions for the OPEC meeting outcome.

In order to determine crude oil trend in global markets we must first understand what is behind Saudi Arabias actions, which were the fundamental trigger for the current weakness in crude oil prices. The official reason is to increase its competitiveness in US markets due to the shale crude oil extraction. We believe there is more behind the price cut than shale crude oil production as many analysts express. There is a global effort to dismantle the Islamic State (IS or ISIS) in Asia, particularly in Iraq and Syria. According to the latest reports the Islamic State is controlling six oilfields that are used for their smuggling operations. The Islamic State smuggles crude oil produced at the oilfields to Turkey, Jordan and Iran by selling crude oil for half its price and even less, earning millions of dollars per week. We therefore believe Saudi Arabia, the worlds largest crude oil exporter, knew their decision to cut oil prices in the United States will spiral out of control. In our views, this is an effort to harm the Islamic States capital flow and we tend to believe it was coordinated with other major countries. To simplify the complexity of the matter, these are the 12 country members in OPEC:

United Arab Emirates (UAE)

Saudi Arabia

Based on our assumption, Iraq, Iran, Saudi Arabia, Kuwait, Libya and Algeria will vote not to cut oil production, which will stabilize the fall in crude oil prices. These are half the members in OPEC. The wildcard is Qatar. It is has been speculated that the Islamic State was originally funded by high-net worth investors in Qatar until ISIS was able to produce its own funds from the crude oilfields. It is very likely Qatar would vote along with the 6 members to vaporise the foul stench of allowing those investors to freely transfer the funds to the Islamic state. We are perfectly aware of the recent comments that are made in the media by OPEC members but would like to quote Al-Naimi, the Saudi Arabian minister of Petroleum and Mineral Resources, Prices are always fluctuating. This is a normal situation.

Crude Oil OPEC Trading Strategy

The technical analysis is based on the monthly and weekly charts.

US Crude Oil Monthly/Weekly Charts

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Brent Monthly Chart

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The key appears to be within the 50% Fibonacci level, which is often deemed as a natural correction to moderate gains/losses in the market. It is of course insufficient to execute neither a short or a long trade in the market but does make room for a possible bullish correction. Although the analysis was made on a monthly and weekly charts, the technical correction we are referring to is snap rebound following on the re-test before a resumption of the downtrend, which was initially triggered when the support level (in black) was breached. This rebound, should it occur, may be capitalized via an intraday level.

Brent crude oil has also found support at 78.90. Similar to US crude oil, the downtrend is expected to resume towards 72.00 but a possible bullish correction from current levels cannot be ruled out. We researched the market and found a possible event before the OPEC meeting that could spark a short-lived rally in crude oil prices. On the 24 November, 2014, Iran nuclear negotiations will expire. To recap. Many predict the negotiations will not bear any fruit, which if materialize may result in further sanctions against Iran. The other alternative scenario aside a miraculous agreement is an a request for an extension to the negotiations talks by Iran. We find it however difficult to believe it will be accepted.

What may happen as we near the 24 November is comments by Iranian officials, similar to the Strait of Hormuz threats as we have witnessed several years ago. The Strait of Hormuz is a strategic checkpoint in which crude oil is transported, connecting the Persian Gulf, the Gulf of Oman and the Arabian sea. Over 15 million barrels a day are transported through the Strait of Hormuz. It is not in Irans interest to spike crude oil prices as we have discussed earlier but if a deal will not be struck the market may price-in Irans possible actions to retaliate the threatening sanctions.

As the market is mostly short in crude oil, short covering may be seen ahead of the 24 November or react to any news from the negotiations. As we are looking for a brief rally with the Iranian deadline acting a possible fundamental trigger for the bullish correction, we see no reason why to refrain from a long trade in crude oil. It is essential to highlight we do not have a technical entry in both US crude oil and Brent, the trade is based on the fundamental analysis in our research. Our trading strategy would be to execute a long trade in US crude oil at market price (75.06), protective stop loss order layered at 72.90, targeting 81.00 as our take profit. We will continue to update this trade at the bottom of this page, subscribers will be instantly notified. Our latest market research is available at the homepage .

20/11/14 UPDATE: Crude oil is trading at 75.91 at the time of this writing, inline with our trading strategy. We are closing 15% of the long trade at market price. We are not making any modifications to the protective stop loss order and take profit.

21/11/14 UPDATE: Crude oil is trading at 76.81 at the time of this writing following the PBOC monetary actions (rate cuts). We are closing 35% of the long trade at market price and shift the protective stop to the entry.

21/11/14 UPDATE II: Crude oil is trading at 77.64 at the time of this writing. We are closing 15% of the long trade at market price.

25/11/14 UPDATE: The Iranian talks were extended, leaving no room for further gains in crude oil has we have anticipated. As we have expected, crude oil suffered moderate losses in todays session, encouraging rating agencies such as Moodys revised crude oil price to $75. Our long trade was stopped at the entry but we have liquidated a decent profit.

12/12/14 UPDATE: Crude oil prices (Brent and WTI) continue to be heavily sold at the time of this writing, inline with our trading strategy. Brent is currently trading at 63.10 while US crude oil (WTI) is trading at 59.10.

As US crude oil trade is closed it can now be accessed by all traders. Open trades are restricted to members only. We have been proving trade alerts in the spot Forex market since May 2014. Sign up for one of our plans and review our documented trades performance.

Dow Jones 30 Trading Strategy: Forecasting the Trend

China, PBOC and New QE?

Recent selling across global equities that forced the leading indices such as the Dow Jones 30 and FTSE100 to post moderate losses raised severe questions amongst market analysts, are we in front of a global recession?

When an economic slowdown is noted in China, which is one of the worlds largest economies, investors are pricing the possibility of a ripple effect that will spread into other economies. When the economy is contracting businesses may import less goods from overseas, which will affect businesses that are heavily relying on China such as Australia for example. The Peoples Bank of China (PBOC) recent actions were aimed to increase exports as the local currency (the Yuan) has been devalued. The effectiveness of the PBOC intervention in the Forex market will be measured within the next 60 days. It is therefore possible that if China was the key reason for the selling in global equities it will not surprise us if economic figures from China will gradually improve within the next quarter.

We would like to clarify why many analysts including ourselves predict this is the beginning of a long-term bearish correction.

Dow Jones 30 Bearish Breakout

This is the technical reason why many analysts predict more losses are due for US equities.

DJ30 Breakout Weekly Chart

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The uptrend that has supported the DJ30 since 2011 has been violated, which suggests a shift in momentum or a trend reversal in simple words. What has probably catalysed the selling are concerns the Fed will not hike rates in September as we have indicated on multiple occasions throughout our research and updates.

The recent weakness unfolds two opportunities in the market. Either attempt to capitalize over the corrective gains that often take place after heavy selling or wait for a higher price in order to join the downtrend resumption. In order to concrete our entry we turned into the European indices and discovered the following.

DAX30 Monthly Chart

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EUSTX50 Weekly Chart

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It appears that the recent dip may be corrective before a resumption of the uptrend. At the time of this writing it appears to be limited to European indices but it would not surprise us if the corrective gains in the US markets will be more than just a temporary retracement.

The only scenario in which we see a recovery in global indices while ensuring the US Dollar (USD) remains weak are speculations of a new Quantitative Easing (QE) program by the Fed. Yellen has been with Ben Bernanke throughout the financial crisis and is fully aware on how QE speculations have the power to contain the weakness in US equities. Bearing in mind there is no technical entry to short European indices and the possibility for a retracement to last weeks losses all suggest a long trade should be considered.

We are not considering to execute multiple trades in the market as we have little desire of incurring a high exposure to global indices. After analysing the charts we have decided to focus on the DJ30 and CAC40.

DJ30 Trading Strategy

We are focusing on the Dow Jones 30 weekly chart for our technical analysis.

DJ30 Weekly Chart

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As you may see there are multiple support levels that may contain the weakness in the Dow Jones 30. The nearest support level is at market price (approx.), 16,630, 15,670 that may be supported by the 200 Moving Average (MA) in blue by the time it is tested. The most attractive level is the long the DJ30 at market price as the protective stop will is relatively tight while offering a decent Risk Ratio (RR) on the position. Nevertheless there is little evidence that indicate the current support will in fact hold. Even if the index gaps lower at the opening of the markets bear in mind it is a weekly chart and a recovery may be seen by the end of the week. Entering the Dow greatly depends on how the markets will open.

If the entry is well-timed there is a possibility the trade will be in a fair profit within a short period of time. We will have to time our entry via intraday time frames, which is why we must wait for the opening of the markets.

CAC40 Trading Strategy

For the CAC40 we are displaying the monthly chart although an entry may also be derived from the weekly chart.

CAC40 Monthly Chart

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The CAC40 monthly chart shows the recent dip may be corrective before a resumption of the uptrend. Strong support is noted at 4,530 that contain the weakness that has plagued the index. Even if 4,530 is breached by the market the only scenario where the potential resumption of the uptrend will be negated is at a monthly close at 4,154. Should we decide to enter a long trade in the CAC40 we will not be layering the stop below 4,154 but instead opt for a tighter stop via intraday time frames. A 350 points stop in the CAC40 is completely unjustified.

To conclude our analysis, the European indices appear to be more technically supported than US indices at the time of this writing. There is a possibility European indices may correct higher than US indices but we highlight this is an early assumption. The broader outlook is bearish but for the short-term a technical retracement appears to be the most likely outcome that we may capitalize on.

We highlight that any bearish gaps in the opening will not negate our analysis. If we will be able to locate an entry we will send you an email with the trade alerts details. We are unlikely to issue trades on the DJ40 and the CAC40 unless we opt for the Dow and immediate profits are seen that allow us to substantially reduce our market exposure.

We repeat that what may be the fundamental trigger for the retracement are speculations on a fresh QE, possibly by the Fed.

DJ30 Trade Alert Details (24/08/15)

Entry: Market price (16,392)

Take profit: 17,364

Protective stop: 16,248

Risk Ratio (RR): 1. 5 (approx.)

24/08/15 UPDATE: DJ30 triggered the protective stop loss order we have set for the trade. We have deliberately used a tighter stop and it appears our decision was wise as the index shed over +1,000 points in todays session. We will wait for the weekly or monthly close to consider a re-entry as a spike was possible as we explained in this strategy. The loss was absorbed by our long trades in EURUSD and GBPNZD .

The Dow shed over 1,000 points and recovered 1,000 points (approx.). We did not experience any slippage as the trade was stopped out before the chaos.

Please click on the chat to enlarge:

This is an indication High Frequency Trading (HFT) accounts were involved that accelerated the spikes in the Forex market as well. We believe it will soon be discussed over the financial media

Testing the Martingale System

The Martingale System

The Martingale is an infamous trading strategy that is used in the binary options market, extracted from the core of an average gambler into capital markets. Its simplicity blinds the eyes of many traders across the globe that were unaware of its devastating effects until they unwillingly depart of thousands of dollars, a sum that could have been invested more wisely.

The Martingale strategy was developed in France during the 18th century. The idea of the Martingale is that one cannot consecutively lose on every single bet. Lets take the classic Red/Black bet in a roulette. Lets say we bet on Black and the outcome was Red. We place another bet on Black and it is Red again. If we were to constantly bet on Black there must be at least one time we will be correct. To ensure a profit is maintained, we would constantly double our bet after every loss until we are correct. When that moment arrives, the winnings will cover from the past losses and the remainder is our profit. Traders adopted the Martingale strategy into the binary options market, comparing the Call and Put to Red and Black. It sounds simple and is backed by the logics of statistics, but is it really working?

Martingale in the Binary Options market

Binary option: Call

Payout: 85%

Outcome: Success

Gross profit: $905

Accumulated loss: $804

Net Profit/Loss: +$101

By multiplying the trade size by 2.2 after each loss will ensure a profit will be made once a successful trade is made. The Martingale sounds like the perfect trading strategy so far, which is why so many traders were and still are lured into the this ancient death-trap.

The Martingale Limits

To counter the Martingale system casinos have set a bet limit. in the roulette. Once the limit is reached you can no longer double your bet and your strategic technique is now worthless. In the binary options market there is also a limit to how much you can invest in a single trade. As traditional binary options brokers are market makers, their risk management not allow any traders to invest a substantial amount in a single trade, lets say one million dollars for example. The trading limit sets an obstacle to martingale fans in the binary options market but does not prevent many to praise this wonderful technique.

To provide a fair argument, there are brokers that allow traders to invest as much as $50,000 in a single trade. If we begin trading with a $50 binary options, surely the Martingale system would work, right?

The Forex Market

Although the following would apply to any market, we are focusing on the Foreign Exchange market as it offers the highest payouts in the binary options market. Unlike the roulette the variables are constantly changing in the Forex market, ensuring the trading conditions differ from trade to trade.

Lets take a 60 seconds expiration. In Forex binary options one would require the marker price to be by a fraction of a pip in the predicted direction, call or put at the expiry. Unlike a roulette, each second creates new market conditions for the given trade. For example, if a European bond auction did raised its capital by offering extremely high yields, forex traders are likely to begin selling the Euro. In such a scenario the odds are no longer 50/50 for a call or put binary option. The odds will favour a put option rather than a call option. In another scenario where the Fed raise its interest rate, which will favour moderate gains in the US Dollar (USD) against a basket of currencies will again distort the 50/50 probabilities. Aside from economic data, global events such as natural disasters or comments by market-moving officials also affect the currencies in the market. These events are not scheduled to take place like the economic calendar and can virtually take place in any moment. If such an event occurs and the currency posts moderate gains, being caught on the wrong end of the stick may result in consecutive and substantial losses, leaving the Martingale trader bewildered by the mysterious forces of the market.

When dealing with 60 seconds binary options where a fraction of a pip determines the outcome of the trade, market manipulations by the broker are inevitable despite the regulations. Short-term expirations can be easily manipulated without arising the suspicion of the average trader. Bearing those variables in mind, the Martingale system is now may not appear to be the wisest trading strategy in the binary options market. However, to provide a decent argument, what about a trader that follows the economic data and global events and places the trades in accordance via the Martingale system? If the Fed in fact raises the interest rate, why not purchase call USDCHF (for example) options and for every trade that expires out-the-money continue to double until a payout is earned. After all, the odds are in my favour. And regarding the 60 seconds expirations, I would simply switch to a longer expiry such as 15 minutes or 60 minutes?

Fundamental Analysis

From being completely random, we will explore the Martingale strategy combined with fundamental analysis, executing trades based on economic figures and global events. Lets begin with the economic calendar. There are many occasions where the economic figure surprises to the upside (better than expected), the currency initially gains but then rapidly sold without stopping. If you have encountered such an event while trading you should nothing is random in the market.

Lets take the employment data as our economic figure. There are many investment firms such as Citi and Morgan Stanley that release forecasts for economic figures. If the majority predict a strong (positive) figure forex traders will begin pricing-in the probability of a strong economic figure. The pricing-in is interpreted by buying the currency ahead of the economic figure or trades closing their short trades in the given currency. The pricing-in may occur several days before the data is scheduled to be released or on the same day the data is due. If the economic figure is indeed a strong figure, a minor spike will be seen as traders react to the positive news before a profit realization takes place. Traders that priced-in the strong figure will seize the opportunity to close their trades and claim their profits from the market. As a result, the currency rate will begin falling rapidly.

A binary options trader that will base his or her trades on economic figures is likely at some point suffer from the wrath of the market as consecutive losses are posted. Believing the market will at some point reverse may not take place under such circumstances, ultimately leading to s scenario where the trader departs from the entire investment to the market. We would like to show you a recent event that we are certain lead to heavy losses to traders that used the Martingale trading strategy in the Forex market.

USDJPY chart

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The Bank of Japan (BOJ) decided to exposed its Quantitative Easing (QE) program, which resulted in mass-selling of the Japanese yen (JPY) against a basket of currencies. Martingale traders that decided to place put long-term expirations in USDJPY where on the wrong end of the stick. Doubling the trade size while maintaining the same prediction (put) failed to deliver, resulting in staggering losses.

What about combining the Martingale strategy with fundamental and technical analysis? Technical analysis is using the historic prices of a given a currency pair in order to predict its future price movement. Surely using these techniques will deliver better results in the binary options market?

Technical Analysis

For our example we will use the Relative Strength Index (RSI), support and resistance levels. The RSI indicates when the market is oversold and overbought. To recap, below 30.0 is considered oversold while over 70.0 is considered overbought. A support level is a certain level the price that the currency pair was unable to fall below on at least two separate occasions. A resistance level is a price a level the currency pair was unable to rise above on at least 2 two different occasions. The RSI, support and resistance levels are drawn on the chart. If the price has reached a support level, the RSI is oversold and a recently published economic figure surprises to the upside, the odds favour the currency would continue to rise, perhaps these are best conditions for the Martingale strategy to be exercised?

No trader can succeed on every trade in any market. Despite the technical or fundamental trading strategy there will always be a time the market will trade against you despite your analysis. When a loss is incurred many trades will refuse to accept the losses and increase the trade size or the leverage to re-claim the lost capital. These psychological effects caused a numerous amount of traders to depart from their investment. The Martingale system increases the tension of a loss by encouraging to double the trade size in the chase in an attempt to recover and profit from the previous trade. The outcome as you mat imagine is devastating.

The Martingale strategy follows the rule that historic events cannot be used to predict the future outcome, which is completely against the usage of technical analysis. If you are combining technical analysis with fundamental analysis for trading binary options, when there is a loss why not just accept it and continue to the next trade without doubling your investment? This will prevent you from great grief and substantial losses. If after reading the above you are not convinced the Martingale system will generate losses we will allow your trades within the next four months to speak for themselves.

There is a great difference between trading and betting in binary options. If you view trading as betting then your success rate will be similar to an average gambler. By employing a technical and/or fundamental strategy and a conservative risk management technique you may improve your success rate in global markets.

When your binary option expires in-the-money, the payout originates from traders that were unsuccessful. Therefore, traders must continue to post losses in order to pay to the successful traders. We believe the Martingale traders contribution to the broker and to successful traders is immense but again, who are we to disturb the beautiful harmony in the binary options market?

We have been proving trade alerts in the spot Forex market since May 2014. We began issuing binary options trade alerts since January 2015. Sign up for one of our plans to access our binary options trade alerts and review our documented trades performance.

Euro Dollar Trading Strategy: The QE War

EURUSD Technical Analysis

The Euro suffered from heavy losses in todays session on remarks from European Central Bank (ECB) member Praet that hinted Quantitative Easing (QE) may be pushed up to combat the emerging crisis. The comments were made as a retaliation to EURUSD rates as the low exchange rate serves the interest of the ECB. As we have discussed in our prior research the Fed is likely to hint the possible usage of QE is the crisis will continue, which will in turn weaken the US Dollar against a basket of currencies. We believe this will be the trigger for moderate gains in the global indices as described in our recent trading strategy. We did not bear in mind such comments may be made by the ECB, which is why the recovery began in todays session. For the indices we may choose to wait for the weekly close in order to reaffirm our entry.

EURUSD Daily Chart

Please click on the chart to enlarge:

EURUSD Trading Strategy

In our previous trade in EURUSD we have set a conservative target for the reversed Head-And-Shoulders (HS) neckline breakout. Our decision was wise as the price is currently re-testing the neckline at the time of this writing after acquiring our target. The re-test may indicate a resumption of the uptrend in Euro Dollar.

From our experience it is possible for the price to dip below the neckline in order to flush weak stops before reversing higher. We highlight such a scenario is not guaranteed to happen but a possibility we must consider. The next support in EURUSD is seen at 1.1200, leaving us little choice but to layer the protective stop beneath 1.1200. The target of the long trade would be above the daily high of 24 August, 2015. The objective of the reversal is 1.1850 but we prefer a conservative take profit at 1.1760.

While the US Gross Domestic Product (GDP) is due on Wednesday, Jackson Hole may be the key trigger for EURUSD rally. We are aware the Peoples Bank of China (PBOC) announced Short Term Liquidity Operations (SLO) in the early hours of Tuesday morning but it is not concerning us. Euro Dollar closing below the 200 Daily Moving Average (DMA) is receiving a lot of attention but we believe the objective of the HS has yet to fulfil itself.

EURUSD Trade Alert Details

EURUSD long at market price (1.1311)

Take profit: 1.1760

Protective stop: 1.1139

Risk Ratio (RR): 1. 2.6 (approx.)

Estimated duration: 14 days

27/08/15 UPDATE: EURUSD dipped towards 1.2000, which was a possibility we discussed and does not negate our projection for the pair. EURUSD is trading at 1.1218 at the time of this writing. Unfortunately however, we have discussed our intention to re-enter the indices and crude oil but sought a weekly close confirmation. The recent gains in crude oil make it almost impossible to re-enter while if these will be the current levels in the indices at the weekly close a re-entry is unlikely. The PBOC capital injection into the markets triggered the rally. To recap. this was our strategy for the indices: DJ30 Trading Strategy

28/08/15 UPDATE: EURUSD is trading at 1.1185 at the time of this writing. The pair was able to recover above 1.3000 but was unable to sustain the gains following remarks by Fed Fischer in regards to a rate hike in September. There are growing expectations for the ECB to cut rates on Thursday. which may suggest we are due to experience great volatility ahead of the ECB monetary policy meeting. The best scenario would be short EUR traders cutting their exposure to the Euro, which will in turn lift EUR against a basket of currencies. Our main concern are the gaps that may occur following the weekend. We are not modifying the stop. If we are stopped out we will focus on the next trade in the market.

01/09/15 UPDATE: EURUSD is trading at 1.1270 at the time of this writing. In light of increasing expectations for the ECB to slash the deposit rate on Thursday we are not issuing new trades until our exposure to the Euro is reduced. Although there is a possibility the Euro could benefit from the cut, on most scenarios we estimate EURUSD to drop between 100 to 200 pips.

It is essential to highlight the ECB may not slash rates at all. As we are aware of these expectations we choose to adopt a conservative approach. We will not hesitate to downsize the trade with a loss ahead of the ECB meeting should EURUSD fail to correct higher by Thursday.

07/09/15 UPDATE: Although we had the ability to downsize the trade on ahead of the ECB meeting we chose to wait for the ECB meeting. The rates were not slashed by as soon as the HICP projection was revised lower and the dovish tone Draghi adopted in regards to the QE ensured EURUSD has triggered the protective stop of the long trade.

As EURUSD long trade is closed this page can now be accessed by all traders. Open trades are restricted to members only. We have been providing trade alerts in the Forex market since May 2014.

Intraday Strategies: Technical Entry in EURCAD

EURCAD Intraday Strategy

EURCAD is providing a fairly decent entry. Although we would have preferred a deeper downtrend the reversed Head-And-Shoulders (HS) neckline was breached (1.5005) before the close on Friday.

EURCAD 4hr Chart

Please click on the chart to enlarge:

The real question is whether the price will re-test the breached neckline or simply resume the uptrend. By taking a trade at market price without a re-test will often mean the trader must be prepared to absorb a possible retracement within the stop loss order that is used. By the book the price may re-test the neckline (now acting as support) before correcting higher. Concentrated amount of stops within a tight region will often provide decent conditions for stop hunting. We would therefore expect EURCAD reversal to remain valid as long as 1.4960 holds, which is the latter support.

It will be easier if EURCAD gaps lower at the opening of the Forex market on Sunday night and remain above 1.4960, which would constitute as a re-test. There are multiple targets for the reversed HS. The objective of the reversal is 1.5300, however, we prefer a more conservative target, which is 1.5112. We suspect there will be a short-lived spike in Euro Cad followed by corrective weakness, hence the usage of a more conservative target.

Moodys credit rating agency upgraded Irelands L-T Government Bonds to positive towards the Friday close, which may have a positive effect on EUR pairs and crosses. Although this mat not be relevant to EURCAD technical analysis the Greek elections are likely to be the centre of attention this week. According to the latest polls the Syriza party has the lead.

Gold 15min Strategy

Although the Industrial Production data may have a significant impact on XAU/USD we are still attempting to provide a 15min strategy for the commodity.

XAU/USD 15min Chart

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The price is painting a potential reversed Head-And-Shoulders (HS) on the 15min chart. Resistance is noted at $1,108.50, supported by the 100 Moving Average (MA, in black). Although a re-test of the resistance may lead to corrective weakness in the precious metal, a more rewarding signal may be a re-test of $1,105, which is currently supported by the 21MA. A successful re-test of $1,105 may paint the right-hand shoulder of the reversal pattern. Price may then retrace back to $1,108.50 (HS) neckline where a break above may pave the way for stronger gains towards $1,110.

The 15min strategy may not be relevant for the European session due to the economic data from China.

14/09/15 UPDATE: XAU/USD missed our target by approximately 50 cents.

Please click on the chart to enlarge:

You may see how the right-hand shoulder was painted which lead to a moderate recovery in the commodity. EURCAD is trading at 1.5025 after re-testing the 1.5005 neckline as we highlighted in the strategy. EURCAD posted a high of 1.5037 before retracing lower.

22/09/15 UPDATE: With a slight delay, we have issued en email to our subscribers when we noted EURCAD was held in a tight range above 1.4960. EURCAD initially retraced off the first support (approximately +20 pips) before re-testing 1.4960). The range indicated the strategy may be invalidated by the market. The range continued for some time until the price broke below 1.4960, invalidating our projection for the currency pair.

Weekly Trading Strategies: Euro-Swiss and Dollar-Yen

EURCHF Technical Analysis

The Save Our Gold has been widely rejected, inline with the latest polls that suggested the YES camp is unlikely to submit the Swiss National Bank (SNB) to its knees. A statement has been released for the SNB, expressing its comment to the EURCHF 1.2000 floor and would not hesitate to adopt new measures in order to sustain the floor. As we have elaborated in our earlier EURCHF market research we do not believe the SNB will have the ability to sustain the floor. The verbal intervention threats were not translated into real action aside negative rates on CHF holdings by Swiss banks, which did counter any attempts to re-test the SNBs tolerance. The market has yet to open at the time of this writing but we believe EURCHF is likely to gap higher as a reaction to the referendum results and the SNB released statement. This would make a great opportunity for us to increase the short trade we are still holding in Euro-Swiss. If you have been following EURCHF you would have noticed the market is not intimated by the SNB and always corrected the artificial gains in the FX pair.

Verbal intervention was proven to be ineffective in the medium-term as have witnessed from the Bank of Japan (BOJ) and the Bank of England (BOE). We do not see how the SNB differentiates from other central banks. To determine our entry for the short trade we will use EURCHF daily chart.

EURCHF Daily Chart

Please click on the chart to enlarge:

Our preferred entry will be anywhere between 1.2052 1.2082, depending on the opening price of Euro-Swiss. The 1.2052 resistance is supported by the 55-Daily Moving Average (DMA, in black) while the 1.2082 resistance is supported by the 200DMA (in blue). Our preferred price for the protective stop loss order will be above the 200DMA while we target a break below the 1.2000 floor. When the market opens at 22:00 GMT we will analyse the anticipated gap and release our trade alert when we find it applicable. You may subscribe to DDMarkets to be instantly notified when trading strategies are released and follow us on twitter .

USDJPY Technical Analysis

As published in our extensive market research on USDJPY. we believe current levels are ripe for executing a short trade based on the monthly chart. The fundamental trigger is likely to be the Japanese parliamentary elections that have scheduled for 14 December (Sunday), 2014. When the Forex market opens we will study Dollar-yen on multiple time frames. Should our technical models be in line with our bearish outlook for the pair we will issue a trade alert.

We are aware there are many critical events this week, starting with China Manufacturing PMI, The European Central Bank (ECB) monetary policy press conference and the US Non-Farm Payrolls (NFP). As we are using the monthly chart we are concerned these events will negate our technical projection for USDJPY.

USDJPY Trade Update

USDJPY is trading at 118.75 at the time of this writing as the FX markets opened from the weekend break. We are executing a short trade at market price, protective stop layered at 120.20, targeting 110.75. This is a medium-term trade that is based on the monthly chart as clarified in our USDJPY research that was published in November.

EURUSD Technical Analysis

In our previous EURUSD analysis we have outlined the established uptrend on the hourly chart, offering buy-on-dips strategies to be exercised. However, the price sliced through the intraday support with a notable re-test that affirmed the success of the breakout. Rather than extending its weakness, it appears Euro-Dollar found an intraday support at 1.2429.

EURUSD 60 Minutes Chart

Please click on the chart to enlarge:

We believe EURUSD is due to consolidate between 1.2429 1.2486 until a firm breakout is initiated by the market. Traders may be less keen on taking fresh traders as the ECB could surprise on Thursday. The support (1.2429) may be used for initiating long trades following a re-test (stop below the support) while resistance (1.2486) may be used for executing short trades upon a successful re-test. A breakout above the resistance or below the support would affirm the intraday trade for EURUSD.

As it is the monthly close, we will publish our medium-term trading strategies within the next 48 hours, covering the Foreign Exchange market, Commodities, Stocks and Indices.

01/12/14 UPDATE: EURCHF is trading 1.2032 at the time of this writing. We require a higher price in order to increase our short trade in EURCHF. If Euro-Swiss will trade higher before closing the gap may issue a trade alert for a short trade.

01/12/14 UPDATE II: EURUSD has re-tested the intraday support at 1.2429 and rebounded to 1.2452 at the time of this writing, inline with the trading strategy we have presented in this research.

EURUSD Current 60 Minutes Chart

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We will continue updating EURCHF, EURUSD and USDJPY trades at the bottom of this page.

01/12/14 UPDATE III: Moodys credit rating agency downgraded Japan credit rating by one notch to A1, triggering heavy selling in USDJPY, ensuring our short trade is in a decent profit. USDJPY is trading at 118.24 at the time of this writing. We are closing 10% of the short trade at market price. EURUSD is in held in a tight range as we have expected. Due to the great volatility we have notified all our subscribers regarding that we expect moderate gains in Gold at the beginning of the European session, the analysis is available on our Twitter account. Make sure to check our streaming market news on the homepage.

02/12/14 UPDATE: USDJPY is trading at 118.43 at the time of this writing, no action is taken. We have however released a new trading strategy in gold.

03/12/14 UPDATE: USDJPY is trading at 119.18 following a strong demand for the US Dollar. As this is a monthly entry, we continue to maintain our bearish projection for the pair.

03/12/14 UPDATE II: USDJPY is trading at 119.79 at the time of this writing. The monthly outlook has not be negated but we are uncomfortable with the recent gains in the pair. If our technical models indicate a bullish trend on the daily/weekly chart we will not hesitate to downsize the trade with a loss as a part of our risk management.

04/12/14 UPDATE: USDJPY rally in Wednesdays session were as a result of the latest polls for the Japanese elections (to be held on 14 December 2014) that showed the LDP to have 300 sits out of 475. The 120.0 price level in Dollar-yen holds a USD 3.0 billion option, set to expire on Thursday at the NY cut (15:00 GMT). We certainly hope it will not be persistently targeted by the market.

07/12/14 UPDATE: USDJPY triggered the protective stop loss order we have layered for the short trade. Despite liquidating 10% of the trade with a profit following Moodys Japan downgrade a loss was incurred. Our latest trading strategies are displayed at the homepage.

Trade alerts are also issued in the weekly update .

Advanced Market Analysis

Our Trade Alerts

We provide advanced trading strategies in the Foreign Exchange market (Forex), Commodities, Indices, Stocks and Binary options. As opposed to a customary trading signals service, our trade alerts aside binary options are designed for swing, medium and long-term where an estimated duration of the trades are provided. Our goal is to attain a decent Return on Investment (ROI) at the end of end of the month. We adopt a similar concept for our binary options trade alerts.

Always aiming for superior quality.


Every trade alert is immediately published on the website and all the traders that are subscribed to our trade alerts packages are instantly notified a new trade alert has been issued via email with a link to the trading strategy. To ensure the authenticity of the trade alerts we include the chart used for the analysis and the date and time the trade alert has been issued is documented. Within several minutes we publish a link to the trade alert on our Facebook page.

Rather than a blank trade alert we also provide crucial information in order to assist our traders: