Variety Of U.S. Reports On The Economy Make For Strong Trade Possibility


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By Darrell Martin On Thursday, March 12 at 8:30 AM several reports on the economy will be released: The Core Retail Sales, Retail Sales and Import Prices. To take advantage of a trade opportunity after the reports, it is recommended to use Nadex Spreads. Nadex offers options, specifically binaries and spreads. The name stands for North American Derivatives Exchange. When trading options there are two ways to collect premium, through implied volatility built into the price and through time passing and premium expiring. This trade setup will be a premium collection trade on implied volatility since you can enter as early as 8 AM EST for a 10 AM EST expiration. Core Retail Sales is the change in the total value of sales at the retail level excluding automobiles; whereas, Retail Sales is the change in the total value of retail sales. Since auto sales tend to be volatile, the Core Retail Sales report excludes those sales numbers. Retail Sales is a key gauge of consumer spending which accounts for the larger part of the overall economic activity. Both of these reports are released by the Census Bureau. The third report to be released Thursday morning is Import Prices released by the Bureau of Labor Statistics. This reports the change in the price of imported goods and services purchased domestically. Based on 24 Past News Releases Researched As is the case with the market on a regular basis after a government news announcement, the market will go so far but then return. It usually does not go in just one straight direction and continue. To trade a scheduled news event you can look back at how the market reacted in the past and measure the moves to see if there is a consistency in the range of the moves. Apex Investing does this on a regular basis for many scheduled news events and found that the EUR/USD moves an average of 30 pips after these reports are released. They look back 24 months for consistent moves and then look for an average number of the moves in the last 12 months. Based on their research, it is recommended to use an Iron Condor strategy where you sell the upper spread and buy the lower spread. The ceiling of your lower spread should be where the then current underlying market is trading. The floor of the upper spread should be where the then current underlying market is trading. Setup for $30 Profit Potential Or More In the Iron Condor Again, you can enter as early as 8:00 AM EST for a 10:00 AM EST expiration. Be sure that your Iron Condor has a profit potential of $30 or more. If there are no spreads available to allow for a $30 minimum profit potential setup, then there is no trade. The market will move and then pull back after the news event. The closer the market comes back to the center of your spreads, the closer to max profit your trade will be. You can leave your trade on until expiration to let the trade have the greatest opportunity to profit. For this strategy the market doesn’t have to react at all. It can remain where it started, and it would make max profit at expiration. If $30 doesn’t seem like much, you can trade more spreads. Be sure to keep the same number of spreads on each side. If you are interested in trading more news events, Apex Investing posts a running calendar with the event and strategy recommended. You can visit www.apexinvesting.com.