By Darrell Martin
Released every four weeks by the Australian Bureau of Statistics, Building Approvals tells of the change in the number of new building approvals issued by the government. Building Approvals are also known as building permits and cover all types of dwelling units, whether houses, flats, units or apartments.
Building Approvals will be released at 9:30 PM ET on Tuesday, August 29, 2017. Since building permits are a key indicator of demand in the housing market, such news can and does influence the market. It offers a trading opportunity.
The previous release on August 2, 2017 was forecast at 1.500 percent and actually came in at 10.900 percent. This release is forecast for negative 5.100 percent.
One can trade this opportunity by using Nadex AUD/USD Spreads and an Iron Condor strategy. This strategy is set up by buying a lower spread and selling an upper spread. The ceiling of the lower and the floor of the upper should be where the market is trading at the time of entry.
The goal is to have $30 or more profit potential with each spread having at least $15. The market can move up or down 30 pips from where it started. If the market is within this range, the trade can collect profit as time expires or if it remains in that range at settlement. Max profit is made when the market is centered between the two spreads at settlement.
The chart below details the amounts of profit or loss depending on how far the market moves up or down.
One can enter the trade as early as 9:00 PM ET for 11:00 PM ET expiration. For a 1:1 risk/reward ratio, one could place stop limit orders 60 pips above and below point of entry, as shown in the chart above. Never force a trade. If there are no spreads available with that profit potential, there is no trade.