Four Canadian Economic News Reports In Time For an Iron Condor


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By Darrell Martin

Various Canadian economic news reports will be released Friday, January 20, at 8:30 AM ET. Among them are Consumer Price Index (CPI), Core CPI, Retail Sales, and Core Retail Sales. Consumer prices makes up the bulk of inflation, which in turn influences interest rate decisions that can affect currency valuation. Retail sales tell a picture of economic activity. The core reports exclude volatile items like auto sales.

This scheduled news can be traded. Typically, the market will react and move, then make a retrace and pull back. To profit on this kind of move, use an Iron Condor strategy, trading Nadex USD/CAD spreads. The Iron Condor is a strategy best used during ranging markets or when it’s anticipated the market will return to where it started. This is a news event with this type of move happening on average over a 12-month period.

One Nadex USD/CAD spread is bought below where the underlying market is and one spread is sold above where the underlying market is. The ceiling of the bought spread should meet the floor of the sold spread and be where the market is trading at the time. The suggested profit potential for this trade is $30 or around $15 for each spread. Entry can be as early as 8:00 AM ET for 10:00 AM ET expiration.

For the sold spread to profit, the market needs to stay, move down or up and then pull back to its floor. For the bought spread to profit, the market can also stay where it is right at the ceiling of the bought spread and the floor of the sold spread. Conversely, the market needs to move up or move down and pull back up to the ceiling of the bought spread. When the market settles in between the two spreads is max profit.

The market can move as far as 30 pips up and 30 pips down for this trade before any possibility of losses can happen. A loss is only incurred at settlement or when exiting the trade and the market is past those two points. The trade profits when the market settles anywhere in between that 60-pip area. It is $1 less in profit for every pip away the market is from the center of the two spreads at settlement.

Stops can be placed in the event the market takes off and doesn’t pull back. The 1:1 risk reward ratio points are 60 pips above and below from where the market was at entry. More spreads can be used as long as there is the same number on each side of the trade.

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