By Darrell Martin
If you’re day trading, yet you’re finding the hours difficult because you have a day job, then consider trading the news in the evening hours. News is released affecting the markets around the clock. Australian economic news is frequently released in the evening hours Eastern Time in the US and this can cause tradable volatility particularly in the AUD/USD market. Coming this Thursday, January 28, 2016, at 7:30 PM ET, the Australian Bureau of Statistics will be releasing their Producer Price Index (PPI). This comes out as a percentage showing whether there has been a change in the price of finished goods and services sold by producers. If producers are charging more for goods and services, typically the higher costs are passed down to consumers. This makes PPI an important indicator to watch for consumer inflation.
How do you trade this kind of event? News is hard to trade in a certain direction because no one knows the numbers that will be released and or how the market will react, whether it will go up or down. For news releases that come out on a regular schedule, you can track the market reaction to look for any consistencies. This is what Apex Investing has done on numerous scheduled news events. From the research, a calendar of news events was created for trading along with recommended strategies.
For this event, it’s not typically known which direction the market will go, however it is known that the market typically makes a move of a certain distance and then pulls back. Based on that kind of movement, an Iron Condor strategy is recommended, with a profit potential of $30 or more.
This Iron Condor strategy calls for you to trade Nadex AUD/USD spreads. Spreads allow you to trade a specified range of a market. They have a floor and a ceiling, which you cannot win or lose past, depending on which direction you trade the spread. To set up the trade, buy a Nadex AUD/USD spread below the market. The floor of the spread will be below the market and the ceiling of your bought spread should be where the market is trading at the time. You also want to sell a Nadex AUD/USD spread above the market. This spread’s ceiling will be above the market and the floor of your sold spread should meet the ceiling of your bought spread and be where the market is trading at the time. You can enter the trade as early as 7:00 AM ET for 9:00 AM ET expirations. To easily find these spreads at a glance, use the spread scanner developed by Apex at www.apexinvesting.com. You can see an image of the spread scanner below.
You can see you are buying below the market and selling above the market. Therefore, to profit you will want the market to move and pull back to where it was when you placed the trade, or you will want the market not to move at all and just stay, or remain in a tight range. In the latter example, you would let the spreads expire and collect the profits from the difference of where you bought and sold and where the market settled, right between your spreads. With that amount of profit potential for this strategy, the market can move 30 pips up or down and be at breakeven, and as far as 60 pips up or down for a 1:1 max risk reward ratio.
To learn more about news trades or how to trade Nadex binaries and spreads as well as futures forex and CFD’s, go to www.apexinvesting.com. Nadex is a US based exchange regulated by the CFTC and can be traded from 48 different countries.
