By Darrell Martin
On Friday, January 19, at 4:30 A.M., the Office for National Statistics, UK, will release four reports. These could affect trading and will vary in importance between medium and high. The reports will concern retail sales and core retail sales, each in relation from month-to-month and from year-to-year. Such reports gage changes happening in the United Kingdom’s economy. There are various ways reports of this nature can affect the market and offer a trade setup.
News reports are known to cause volatile movements in the market. Reactions to this kind of news are usually followed by a pullback after the movement. However, the direction of this movement remains unknown.
One advantageous strategy the trader might use is known as the Iron Condor. It uses two Nadex GBP/USD spreads. The first spread is purchased below the market as the second is sold above the market at the same time. This allows the trader the opportunity to collect a premium regardless of how the market moves. At the time of entry, the ceiling of the spread purchased ought to meet the floor of the sold spread and be where the market is trading.
Collecting Trade Premiums
With the Iron Condor strategy, both trades profit relative to the center when the market goes up or down, once the pullback occurs. As the time expires, both spreads can profit. This results in a collection of premium. Risk can be maintained to keep a realistic 1:1 potential. There is no risk beyond the floor and ceiling of spreads.
This trade can be entered as early as 11:00 P.M. EST on Thursday, January 18 for a minimum profit of $35. The 7:00 A.M. EST expiring spreads will be available the night prior to the release of reports, providing an overnight opportunity to trade. This is a great trade to demonstrate and familiarize further with market reactions occurring between news events and Nadex spreads. Once the trader has accomplished this, of course, this strategy can be traded live.
Education for day trading is offered free at Apex Investing.