By Darrell Martin
Scheduled news events are excellent times to trade if you have a good idea of how the market will react and a trade strategy to go with it. Tuesday, July 21, 2015 at 2:00 AM ET the Federal Statistical Office of Switzerland will release the trade balance for the reported month. The trade balance is the difference in value between imported and exported goods and services during the reported month. A positive number means more goods were imported than exported and if the reported number is greater than forecast it is good for currency.
Based on analysis of market reaction from 12 - 24 previous reports the USD/CHF tends to react and move but then will pull back. Because of that information, it was found that a neutral Iron Condor strategy was a good strategy for this news event. Also for this trade, if you are in the US, few traders are going to want to trade at 2:00 AM ET.
Event Is At 2:00 AM, But Put The Trade On At 11:00 PM
The Iron Condor has a wide “wing span” by using two spreads. Fortunately you can enter as early as 11:00 PM ET, Monday, July 20th, the night before with 7:00 AM ET expirations. For this trade you want to use Nadex USD/CHF Spreads. Buy a lower spread with the ceiling being where the underlying market is trading at that time, and sell an upper spread with the floor being where the underlying market is trading at that time. The trade can be left on until expiration which gives it plenty of time to play out.
Profit Potential Is $35 Or More With Original Strategy And You Can Add More Contracts
The profit potential should be around $35 or more. That may seem minimal, however, you can trade more contracts as long as you have the same number on each side of the strategy. With this news event the market tends to take off and then pull back. The closer the market comes to center between the two spreads the greater your profit potential. Unlike binaries, you won’t lose everything if the market is above or below a strike number. For every tick below the ceiling on the bought spread, that would be $1 less profit, and for every tick above the floor on the sold spread that is $1 less profit. If you lose any profit on one side though, that means you made max profit on the other. With a profit potential of $35, the market can move 70 pips in either direction and the trade is still a 1:1 risk reward ratio. As a reminder for this trade, it is expected the market will take off and then pull back.
For a complete calendar of news trades and strategies to trade them, visit www.apexinvesting.com a service provided by Darrell Martin. Nadex can be traded from 49 different countries. For more explanation on Iron Condors, see The Awesomeness Of An Iron Condor.