By Darrell Martin
Scheduled economic news is released 24/7 around the world. With news can come market volatility and with that can come trading opportunities. Tuesday, early in the morning US east coast time, various reports for Great Britain will be released including the Consumer, Producer and Retail Price Indexes as well as Public Sector Net Borrowing.
In anticipation of this news, there can be implied volatility present in the pricing of spreads. Using Nadex GBP/USD spreads, with the right strategy for this news, favors a high probability trade.
The news is released Tuesday, March 21, at 5:30 AM ET. With an Iron Condor strategy trading two spreads, the trade can be placed as early as 11:00 PM ET, the evening before, when the spreads are released for 7:00 AM ET expiration. One spread is bought below the market with the ceiling where the market is trading at the time of entry, and one spread is sold above the market price and with its floor where the market is trading at the time. Each spread should have a profit potential of $17 or more, making for a combined profit potential of $35 for the trade.
There can be more spreads traded, and the spreads can have more profit potential. Be sure to keep the Iron Condor balanced and have the same number of spreads sold as bought. Once the news is released, the market has tended to react, make a move and then pull back. For this setup, with a contract bought below the market and another sold above the market, a market move and a pullback close to or right to where it started from makes for high or max profit. The trade can be left on until settlement to let it play out or if it’s reached high profit, can be exited early.
Stops can and should be placed where the market would hit a 1:1 risk reward ratio point. For this trade, that would be where the market hits 70 pips above and below from where it was at entry. Spreads are quick and easy to find, even for first time traders, using the spread scanner on the Apex website. The scanner was designed by traders to meet their trading needs, including learning how to trade spreads quickly, finding the right spreads for a strategy at a glance, and including all necessary information for advanced traders for multiple markets in one screen and immediate accurate entries.
A complete calendar of scheduled news events along with news strategies is available at www.apexinvesting.com. Free day trading education is available there for all traders.