By Darrell Martin
If you like the Iron Condor strategy trading spreads or want to learn them and therefore practice the strategy, now is the time!
The US FOMC will have its say Thursday, December 17, at 2:00 PM which can shake things up a bit giving traders opportunities to send a flock of condors in to take profit!
The Federal Open Market Committee (FOMC) members vote on monetary policy, regarding interest rates and other policy measures. This news event has 3 parts to it: the FOMC Projections, FOMC Statement and Federal Funds Rate.
The report includes their projection for inflation and economic growth over the next 2 years, as well as the individual FOMC member’s interest rate forecast.
The first release is in the spring of the year and at each release thereafter the actual statement is changed slightly which is what traders are focusing on. The statement itself contains the outcome of the vote on interest rates and policy measures.
The statement can shed light on future outcomes of statements as well. Besides the bible, it could be the next most analyzed piece of writing. Regarding the federal funds rate, the short term interest rates are the paramount factor determining currency valuation. Therefore, traders are very interested in the rate as well as reading any clues to what the change in rate may be in the future.
This report heavily influences traders who then send markets moving however, the markets tend to settle after the initial reaction. The markets move and then settle, frequently returning to where the markets started, making it a great time for using a neutral strategy like an Iron Condor.
It’s called neutral because the market hasn’t made a clear move and continued in one direction. A scheduled event like this makes a great opportunity for Iron Condors to swoop in for the profit. To review the strategy, an Iron Condor is a strategy that uses Nadex Spreads.
You sell an upper spread and buy a lower spread with the upper spread’s floor being the same underlying market price as the lower spread’s ceiling.
The best opportunity for profit here is if price moves and then returns to expire in the middle of the upper and lower spread.
Below is a list of possible Iron Condor setups starting at 11:00 AM EST and expiring at 2:00 PM EST. Remember the earlier you enter, the greater the profit potential and that the markets tend to be less volatile while they are anticipating big moves in the afternoon when the report is released.
Apex has a complete monthly news plan to trade a variety of markets based on numerous news events. If you would like to learn more on how to trade Iron Condors or trade news events go to www.apexinvesting.com. Apex Investing Institute offers free education, and free access to the Nadex Binary and Spread Scanner Analyzers. Member traders are invited to trade in the rooms, take advantage of trade signal services, have key indicators and access the Apex Forum. The forum content is updated daily and includes over 8000 members. In a supportive learning community of seasoned as well as up and coming traders, traders of all levels learn how to trade Nadex binaries and spreads in depth, as well as futures, forex, stock and options, and gain an edge for successful trading overall.