Early Morning News Trade For EUR/USD On Europe's Minimum Bid Rate


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By Darrell Martin

Europe’s Minimum Bid Rate will be released Thursday, October 20, at 7:45 AM ET. This report is also known as the Interest Rates, Refi Rate, and Repo Rate. The rate is on the main refinancing operations that provide the bulk of the liquidity to the banking system. While this report is somewhat overshadowed by the European Central Bank Press Conference following it, this event can still be a trading opportunity.

Using Nadex EUR/USD spreads, an Iron Condor strategy can be traded based on the average market reaction move of 25 pips followed by a pullback. To set up for this kind of move, one spread is bought with the floor where the market is trading at the time and one spread is sold with the ceiling where the market is trading at the time. Each spread is set to make profit on the market pulling back to center between the spreads. There, at settlement, the trade makes max profit.

Unlike binaries, spreads profit or lose only by the amount of pips or ticks the Nadex indicative market moved and settles from the entry point. Binaries profit or lose all or nothing at settlement.

The trade should have a profit potential of $25 or more combined between the spreads. This may not seem like much, however, more spreads can be traded as long as there is the same number of spreads bought as are sold. Enter the trade as early as 6:00 AM ET for 8:00 AM ET expirations.

Stop limit orders should be placed in the case of the market taking off and not pulling back. The stops should be placed at 50 pips above and below from where it started. At these points, there is a 1:1 risk/reward ratio, keeping the risk realistic. The breakeven points are 25 pips above and below and should the market settle anywhere between those two points, then some profit is made.

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