A Trade Balance Announcement Means A Trade Opportunity


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By Darrell Martin Scheduled news events can provide trade opportunities for several reasons. Being a scheduled news event means they are repeatable, so you know when they are going to happen and how regularly. If the markets react consistently with consistent numbers that provides probability for the trade. With news events there is implied volatility that can be built in to the premium of options. The GBP Trade Balance is just such an event that can include all of the above. It is released at 4:30 AM Thursday, March 12, 2015, and makes for an Iron Condor trade opportunity using Nadex Spreads. The GBP Trade Balance comes out from the Office for National Statistics in Great Britain. Specifically, it is the difference in value between imported and exported goods in a reported month. It is released monthly, and if the actual number is greater than the forecast it is good for currency. If the number is positive, then more goods were exported than imported. GBP/USD Moves An Average of 35 Pips Analyzing 24 months of reports and the GBP/USD market reaction specifically in the last 12 months, it was found by Apex investing that the market moved an average of 35 pips. Typically after this event the market will make a move and then return or pull back. It normally does not just take off and continue in one direction. To play to these probabilities you can use an Iron Condor strategy using Nadex Spreads and capture the profit with the Iron Condor’s wing span. You would want to buy the lower spread with the ceiling being where the underlying market price is and sell the upper spread with the floor being where the underlying market price is. With the average move being 35 pips, the Iron Condor should have a $35 profit potential or more. You can always trade more contracts on each side of your Condor as long as you trade the same amount on each side. You can enter the trade as early as 11:00 PM ET the night before on Wednesday, March 11, 2015, for a 7:00 AM ET expiration. You can leave the trade on until expiration. The closer it expires to the center between the spreads where the ceiling and the floor meet, the closer you are to max profit. The market usually moves after the event and then pulls back. If you bought your lower spread for $18 and sold your upper spread for $20, the market could move 20 pips down and you would break even on your bought spread and profit $20 on your upper sold spread. If the market did the opposite and moved 20 pips up, you would profit $18 on the lower bought spread and break even the sold spread. Essentially the market could move 76 pips in either direction for a 1:1 max risk reward ratio. To see a complete calendar of tradable news events and recommended strategies you can visit www.apexinvesting.com.