How To Trade Existing Home Sales News Using Nadex Spreads


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By Darrell Martin

An advantage to trading news events is knowing when the news is coming out. Markets with volatility are good to trade and news can provide that volatility. Having a strategy ready for the anticipated market move is key. Monthly, the US Existing Home Sales number is released and makes for a trade opportunity on the EUR/USD.

To trade this news event, an Iron Condor strategy is recommended for a profit potential of $30 or more. For this Iron Condor strategy, you would use derivatives of the actual underlying EUR/USD market. North American Derivatives Exchange or Nadex, offers spread and binary derivatives for a variety of markets for stock indices, forex and commodities which can be traded from 49 different countries. Trading Nadex EUR/USD spreads for this report, you would sell an upper spread and buy the lower spread for the Iron Condor setup.

This news is released Wednesday, April 22, 2015, at 10:00 AM ET. Therefore, you can enter the trade as early as 9:00 AM ET for an 11:00 AM ET expiration. The bought lower spread’s ceiling should be where the then current underlying EUR/USD is trading, and the sold upper spread’s floor should be where the then current underlying EUR/USD is trading. With this set up, the floor and the ceiling will come together right where the market it trading.

Market Can Move In Either Direction. Iron Condor Is Set Up for Profit Potential

Existing Home Sales is reported as an annualized number which means taking the number of residential buildings that were sold during the previous month and then multiplying it by 12. If the actual number announced is greater than forecast, it’s good for currency. However, with the Iron Condor setup, it doesn’t matter which way the market will go after the announcement. Either direction, the Iron Condor is set up for profit potential.

For a profit potential of $30 or more, you want to buy the lower spread for around $15 and sell the upper spread for around $15. Leaving the trade on until expiration will give the trade plenty of time to play out. It’s anticipated the market will make a move and then pull back. The closer it pulls back and returns to between your spreads, the higher your profit. If at expiration, the market is right on between the two spreads, you make the max profit. To learn more about trading the news and for a full news calen