By Darrell Martin
The Bureau of Economic Analysis will release the US Trade Balance Tuesday, April 5, 2016 at 8:30 AM ET. The Trade Balance is the difference in value between imported and exported goods and services. The number is released monthly for the US and the markets tend to move in reaction, specifically EUR/USD. This news event can be traded using Nadex spreads and a Straddle strategy.
To set up a Straddle, buy and sell a spread in order to actually straddle the market and be prepared for whichever direction the market goes in reaction to the news. Buy a Nadex EUR/USD spread with the floor where the market is trading at the time and sell a Nadex EUR/USD spread with the ceiling where the market is trading at the time. The news is released at 8:30 AM ET and you can enter the trade as early as 7:00 AM ET for a 3:00 PM ET expiration, giving the trade plenty of time to play out.
The other piece of information necessary to place this trade is the risk amount. The advantage when trading a Straddle strategy is the low risk making it unnecessary for stops. This Straddle should have a combined risk of $40 or less. To easily find your spreads, you can open the spread scanner and see all the necessary information, at a glance, in one window available at www.apexinvesting.com. Just choose your market, find the spreads with the right ceiling and floor criteria and a risk of $20 or less on each spread. Click the ticket button and you can place your trade. You will also need a demo or live Nadex account and to be logged in. The scanner was designed by traders to easily learn and trade spreads, and to do it in one window with instant order submission.
The US Trade Balance news can really move the market, and after you enter your trade, you need to set limit take profit orders. With a risk of $40 or less, place your take profit orders where the market reaches 80 pips up or down, where the 1:1 max risk/reward ratio points are. This, of course, will depend on your exact entries. You can always trade more contracts if you like. You just need to have it balanced with the same number on each side. Be sure to demo the trade before trying it live.
Apex Investing has a full calendar of news events with strategies to trade them. Nadex is a CFTC regulated US based exchange and can be traded from 48 different countries.
