By Darrell Martin
At 4:30 AM ET, Friday, September 29, the Office for National Statistics, UK, along with the Bank of England will release a total of 11 reports, which may impact trading. The reports vary in importance from high to low and concern such things as the Gross Domestic Product (GDP), Mortgage Approvals, Current Account, Business Investment and Net Lending to Individuals. In various ways, these reports gage the changes happening to the economy in the United Kingdom. Because of this, the reports can affect the market and offer a trade setup.
News reports generally cause volatility and movement in the market. The reaction to this type of news is usually movement in the market followed by a pullback. However, the direction of the movement is unknown.
Setting up a trade to collect premium and potentially profit regardless of the move of the market could be advantageous to the trader. An Iron Condor strategy utilizes two Nadex GBP/USD spreads. One spread is bought below the market while another spread is simultaneously sold above the market. The ceiling of the bought spread should meet the floor of the sold spread and be where the market is trading at the time of entry.
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 profit. This is a collection of premium.
The following image further clarifies how each spread profits or loses, depending on where the market is at settlement.
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.
With such an early release time, this type of trade can be entered as soon as the 7:00 AM ET expiring spreads are available to trade, which is at 11:30 PM ET, Thursday, the night before the release. This is a great trade to demo and get familiar with market reaction to news events and Nadex spreads.
Free Day trading education is offered at Apex Investing Institute.