The closing price
The second point that decides the result.
Know exactly how the platform compares the two prices and what happens in the edge case.
Price above the entry
- Price above the entry — a winning BUY
- Price below the entry — a winning SELL
Price exactly at the entry
- Price exactly at the entry — the trade is usually returned with neither profit nor loss
The closing price is the quote in the second of expiry. The platform compares it with the entry price, and that comparison gives the result.
- Price above the entry
- — a winning BUY
- Price below the entry
- — a winning SELL
- Price exactly at the entry
- — the trade is usually returned with neither profit nor loss
The size of the difference does not matter. One point and a hundred points give the same result — the main difference from classic trading, where the profit is proportional to the move.
From which a useful conclusion follows: you do not need to catch a big move. You need a minimal but reliable edge in direction, which is why the analysis aims at probability rather than at the size of a move.
Do not confuse the closing price of a trade with the closing price of a candle. The first is the moment of your expiry, the second is the end of a period on the chart. They coincide only by accident.
A note from Leon Mercer Academy
Before entering, ask what the minimum distance is that would settle the trade in your favour. Usually it is far smaller than it feels.
Key takeaways
- The result is decided by comparing two prices: entry and close.
- The size of the move does not change the payout.
- The closing price of a trade is not the closing price of a candle.
The usual mistake
Hunting for a large move. The payout is the same for one point as for a hundred, and hunting the big move pushes you into late entries.
A practical example
Two buys: in the first, price rose by 15 points; in the second, by 0.7 of a point.
The payout is the same in both. Which is why short-term trades work with ideas about a small but predictable move.
Lesson 3 of 15 in “YOUR FIRST TRADE”