By Darrell Martin
The Bank Of England will release the Inflation Report, Official Bank Rate Votes, Monetary Policy Summary and the Official Bank Rate on Thursday, August 3, at 7:00 AM ET. The BOE hasn’t raised interest rates in 10 year. However, in June the monetary policy committee (MPC) was split in its decision. “I think households should prepare for interest rates to go higher at some point. But if rates do go up, it will be in the context of the economy doing OK and unemployment being low and probably falling,” said Michael Saunders, an external member of the MPC. Look for movement in the GBP/USD market Thursday morning. An Iron Condor strategy trading Nadex GBP/USD spreads is a high probability trade that is poised to profit regardless of which way the market goes. The market need only to settle in the range between the breakeven points.
To create a range, one GBP/USD spread is bought below the market and one GBP/USD spread is 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. For this scheduled news event, based on market reaction to past releases, each spread should have a profit potential of $15 or more for a combined profit potential of $30. Entry can be as early as 6:00 AM ET for 8:00 AM ET expiration.
Having bought a spread with $15 profit potential will put the bid price around 15 pips below where the market is and for the sold spread, around 15 pips above the current market level. The market can react to the news and make a move. After the move, it tends to pull back and can range. That is when the trade begins to collect premium as time expires and profit as expiration draws near. Max profit would be if the market were once again right between the two spreads at settlement. If the market is anywhere between the breakeven points of 30 pips up or 30 pips down from where the market was at entry, then the trade will profit.
In the event the market takes off and goes past either of the breakeven points and doesn’t pull back but continues in the same direction, stops can be placed at the 1:1 risk reward ratio points. Those points for this trade would be 60 pips above and below from where the market was at entry. Finding the right spreads is uncomplicated with the easy-to-read visual cues on the Apex Spread Scanner Pro designed for trading Nadex quickly. The green reward potential bars can be found next to each spread, whether buying or selling. This is where to look to find spreads with the minimum $15 profit potential.
