By Darrell Martin
The Producer Price Index for the US is due out Thursday, April 13, at 8:30 AM ET. It’s a leading indicator of consumer inflation. Consumers pay more when producers pass on any higher costs they may have to the consumer. Typically, the markets react with a move and a pullback to this news event generating an Iron Condor strategy trade opportunity.
For setting up this trade, using the spread scanner first set the filters for the EUR/USD market. This will bring up all the Nadex EUR/USD spreads available for trading. Trading the 9:00 AM ET expiration spreads, entry can be as early as 7:00 AM ET, when they are released. Again, using the filters set the time frame for two hours to isolate those spreads.
For this trade, one spread is bought with a reward potential of approximately $17 or more, and one spread is sold with a reward potential of approximately $17 or more. To find spreads with this parameter, look at the risk reward red and green bars. Find a spread for selling and one for buying each with at least a $17 reward potential.
The ceiling of the bought spread should meet the floor of the sold spread and be where the market is trading at entry. Clicking the ticket icon will bring up entry tickets. Verify the ceiling and floor are where they need to be. If all the parameters are met, the entry tickets can be submitted.
Stops should be placed where the market would hit approximately 70 pips above and below from where the market was at entry. At those points, the market will have hit a 1:1 risk reward ratio and risk will have been kept to a realistic level. The market settling right in the center between the two spreads will bring max profit. However, the market can settle anywhere between the breakeven points of 35 pips above and below from where the market was at entry and make some profit.
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