By Darrell Martin
UK Retail Sales news will be released Thursday, July 20, at 4:30 AM ET. This can be an opportunity for a nighttime trade entered before going to bed. The way to take advantage of this trade possibility is to trade the event with Nadex GBP/USD spreads. This instrument is a derivative with capped risk at the floor and ceiling marking the range of the market being traded long or short.
Based on previous market movement to past releases of this news, it was found the market moves after the news and then pulls back. To collect premium and profit on this kind of move, two spreads are sold to make up an Iron Condor strategy. A spread is bought below the market with a minimum profit potential of $17 to $18. A spread is also sold above the market with the same minimum profit potential. The sold spread will trade the range directly above the bought spread’s trading range. The ceiling of the bought spread should meet the floor of the sold spread and should be where the market is trading at the time.
A Premium Collection Trade
With this setup, the market can go up or down and when it pulls back close to the center between the spreads, as time expires, both spreads can make profit. This is a collection of premium. All the trader needs to be sure of is that the combined profit potential for the trade is $35 or more and is quite evenly dispersed between the spreads.
Risk can also be managed further to keep it to a realistic 1:1 risk reward potential. Still, there is no more risk past the floor and the ceiling of the spreads. The stops should be placed around 70 pips above and below from where the market was at entry.
This trade can be entered as soon as the 7:00 AM ET expiring spreads are available to trade at 11:30 PM ET on Wednesday evening before the Thursday release. This is a great trade to demo and get familiar with market reaction to news events and Nadex spreads. Spreads can also be traded to follow a trending market. However, the entry parameters would differ.
For free day trading education, access to a full calendar of news events and strategies to trade them, visit www.apexinvesting.com.