By Darrell Martin
Interest rates have been creeping up since summer affecting mortgage rates. Housing prices in many areas around the US have also been increasing since 2010. With those two scenarios, Existing Home Sales news is watched closely by traders and can be traded.
Home sales are a leading economic health indicator. When homes are bought and sold, it stimulates the economy in many ways. Mortgages are bought and sold, renovations can be made, new furnishings purchased, movers are hired, and various brokers are paid to execute the purchase.
The US Existing Home Sales report from the National Association of Realtors will be released Wednesday, December 21, at 10:00 AM ET. With an Iron Condor Strategy using Nadex spreads, this event can be traded. The Iron Condor is setup to profit whether the market goes up or down. It only needs the market to pull back from any moves it makes or stay and range between the breakeven points.
Buying Below The Market And Selling Above the Market
For this trade setup, based on the average market move, one Nadex EUR/USD spread is bought below the market for a profit potential of around $15 or more and one spread is sold also above the market for a profit of $15 or more. The floor of the sold spread should meet the ceiling of the bought spread and be where the market is trading at the time.
Entry can be as early as 9:00 AM ET for 11:00 AM ET expirations. Nadex is a US based CFTC regulated exchange. The risk is capped and trades can be exited any time.
The 1:1 risk reward ratio points for this trade are where the market would be at 60 pips above or below from where it was at entry. That is where stops should be placed. One side of the trade may profit before the other. In the event this happens, keep the other side on as the market may pull back and the other side may profit as well. Profit is made when the market settles anywhere between the two breakeven points, 30 pips above and below for this trade.
Free day trading education and access to the spread scanner is available at Apex Investing.