By Darrell Martin
The advantage to trading scheduled news events is that they are scheduled. You know when there is a reason for the market to move and can plan what kind of setup to use. Coming up on Friday, April 17, 2015, at 8:30 AM ET, Statistics Canada will be busy releasing five different reports including:
Core CPI
Core Retail Sales
CPI
Retail Sales
Foreign Securities Purchases
The CPI is the Consumer Price Index and this report will measure the change in the prices of goods and services purchased by consumers from the last month. The Core CPI excludes eight of the most volatile items, which can distort the change in the CPI due to the eight making up about 25 percent of the CPI. The Retail Sales is the change in value of sales at the retail level. The Core Retail Sales excludes the retail sales of automobiles from the Retail Sales report. Auto sales account for about 20 percent of retail sales. The Foreign Securities Purchases report is the total value of domestic, stocks, bonds, and money-market assets purchased by foreigners during the month. Why Traders Take Notice Of These Reports Currency demand is influenced by demand for domestic securities as foreigners must purchase domestic currency to purchase Canada’s securities. Retail sales is a primary measure for consumer spending which makes up the majority of economic activity. The Consumer Pricing Index shows us what pricing is doing which determines inflation which in turn influences changes in interest rates. To trade these reports it is recommended to use an Iron Condor setup trading two USD/CAD Nadex Spreads. Sell the upper spread and buy the lower spread, with the upper spread floor and lower spread ceiling coming together where the then current underlying market is trading. Knowing the reports come out at 8:30 AM ET, look to enter your spreads at 7:00 AM ET for a 9:00 AM ET expiration. You can leave your spreads on until expiration to let the trade play out. Apex Investing has tracked the results of market movements after scheduled news events looking back 12-24 months. For this trade, the average move on the USD/CAD is 30 pips. Therefore, look for your spreads to have a profit potential of $30 or more. With An Iron Condor Strategy Trade The Same Number Of Spreads On Each Side If you buy your lower spread for $15 and sell your upper spread for $15, then the market can move 60 pips in one direction and maintain its position for a 1:1 max risk reward ratio. If it pulls back, as it is anticipated based on previous market researched results, the closer it returns to between your spreads the higher your profit. If there isn’t enough implied volatility in the pricing of the spreads for a $30 or more profit potential, then don’t take the trade. However, if there is, and you want to trade more spreads, just be sure to trade the same number of trades on each side. Nadex can be traded from 49 countries now. To learn more about how to trade the news visit www.apexinvesting.com
Read more: http://www.benzinga.com/markets/bina…#ixzz3XLxHMoZn