By Darrell Martin
Get ready to straddle the USD/CAD this Wednesday, April 15, 2015. The Bank of Canada is releasing a number of reports including its monetary policy, rate statement and overnight rate. All three coming out together can cause the USD/CAD to move significantly making for a trade opportunity using Nadex Spreads. Three Reports From Bank Of Canada Traders pay attention to the monetary policy report as it gives insight to the Bank of Canada’s opinion of the condition on the economy and inflation. This in turn influences their interest rate decision announced in the rate statement. The overnight rate is the interest rate that the financial institutions use to borrow and lend funds between themselves overnight. The monetary policy is released quarterly, and the rate statement and overnight rate is released eight times per year.
A Straddle Can Capture Profit In Both Directions When Market Moves Significantly A straddle is a strategy used when the market is estimated to make a significant move which is what Apex Investing has found the USD/CAD to do in the past. Apex Investing analyzes market reaction to news reports over several months. For this report, it is recommended to set up a straddle for a maximum risk of $40 entering as early as 9:00 AM ET for an 11:00 AM ET expiration. The reports are scheduled to be released at 10:00 AM ET. To set up the straddle, buy the upper spread with it’s floor where the underlying market is then currently trading and sell the lower spread with its ceiling where the underlying market is then currently trading. The market will be straddled by your spreads. Either way the market goes your strategy is ready to profit. With a maximum risk of $40 recommended, then for a max 1:1 risk reward ratio, it’s estimated the market could move 80 pips in one direction. For example, if you bought the upper spread for $20, and sold the lower spread for $20, and the market moved 80 pips down, you would lose $20 on your bought trade, and profit $60 on your sold trade, for a net profit of $40. If you would like to learn more about trading news events visit www.apexinvesting.com.