By Darrell Martin
The Bureau of Economic Analysis will release three important reports this coming Friday, February 26, 2016 at 8:30 AM ET, including the Preliminary GDP, Core GDP Price Index and Trade Balance. The Gross Domestic Product is reported quarterly in an annualized format and is predicted to come in at 0.4%, down from the Advance GDP Report at 0.7% for the fourth quarter 2015. “The most current data available suggest that economic growth came to a near standstill at the end of last year, at least in the aggregate,” write economists at Credit Suisse. Traders pay attention to the GDP, as it’s the widest capture of economic activity providing the main measure of economic health. This news event can be a good trade opportunity, as the market tends to make a move and then can pull back, which is great for Iron Condor strategies using Nadex spreads.
With the reports coming out at 8:30 AM ET, you can enter as early as 8:00 AM ET with 10:00 AM ET expirations. You want to buy a lower range Nadex EUR/USD spread, with the floor below where the market is and the ceiling right around where the market is for a reward potential of $15 or more. You also want to sell an upper range Nadex EUR/USD spread, with the ceiling above where the market is and the floor right around where the market is, also for a reward potential of $15 or more.
The Iron Condor Has A 60 Pip Wide Range For The Market To Move Before Breakeven
To enter, you will need to put up the full max risk; however, that is not your realistic risk. With a combined profit potential of $30 or more, the market can move up or down 30 pips before hitting the breakeven points of the trade. The market can move up, one side can profit, and then as the market pulls back and moves down, the other side can profit. If the market moves anywhere in between the breakeven points, you make profit. Max profit is when the market is right between your two spreads at expiration. Realistic risk is a 1:1 max risk/reward ratio. The market can move up 60 pips or down 60 pips and those are your 1:1 ratio points where you want to place stop limit orders for managing risk. At those points, your loss would only be $30.
Upon settlement of your trade, you receive the amount of risk you paid to enter the trade plus your profit or minus your loss. If $30 profit doesn’t seem like much, you can always trade more contracts. Just be sure you have the same number of contracts on each side. To easily find your spreads, you can use the Nadex spread scanner available free to all traders with a free login at www.apexinvesting.com.
Once you have placed your trade. Be sure to enter stop limits for taking profit and for your stops for managing risk. For free education on how to trade Nadex binaries and spreads as well as futures, forex and CFDs visit www.apexinvesting.com. Nadex is a CFTC regulated US based exchange and can be traded from 48 different countries.
