By Darrell Martin
Manufacturing Sales, a leading indicator of economic health, will be released for Canada on Thursday, August 19, at 8:30 AM ET. Manufacturers are affected earliest by market conditions, and thus changes in their sales can be an advance signal for activities such as hiring, spending and investment. This scheduled news event can be traded using an Iron Condor strategy with Nadex spreads.
Two-hour Nadex USD/CAD spreads are released at 8:00 AM ET with a 10:00 AM ET expiration time. Look for two spreads, one to sell and one to buy, each with a reward potential of $12 - $13 or more profit potential. One spread should be bought below the market and the other sold above the market. The ceiling of the bought spread should meet the floor of the sold spread and be where the market is trading at the time.
The combined profit potential should be $25 or more and doubling that tells where to place 1:1 risk reward ratio stops. For this trade, stops should be placed around 50 pips above and below from where the market is at entry. The breakeven points for this trade are 25 pips above and below from where the market is at entry.
The market can move up or down after entry. As long as it settles somewhere close to where it was at entry, in the 50-pip range between the breakeven points, profit will be made. Max profit is when the market settles right between the two spreads.