By Darrell Martin
The monthly Consumer Confidence SurveyⓇ is conducted for the Conference Board who then releases the Consumer Confidence Report on the last Tuesday of each month. The Conference Board is a research association made up of independent business membership. In the past, when this monthly report was released, it was found that an Iron Condor neutral strategy worked well. The recommendation comes after at least 12 - 24 months of market review after reports released. Consumer Confidence is the main read for indicating consumer spending which is the majority of overall economic activity.
Neutral Strategies For Either Direction
Neutral strategies are ones to use when it is unknown which direction the market will go. Iron Condors are also good for when markets tend to pull back or can even remain in the same general area and not move much at all. For this Iron Condor, it is recommended to use Nadex EUR/USD spreads. The number is released by The Conference Board at 10:00 AM ET, Tuesday, August 25, 2015. Based on that timing you would enter your spreads at 9:00 AM ET for 11:00 AM ET expirations.
Nadex spreads are derivatives of an underlying market, in this case the underlying market being EUR/USD. One spread will be your lower spread that you buy, with its ceiling where the EUR/USD market is trading at the time. Its floor is below where the current market is at the time and the ceiling is right at market at the time. The second spread you enter is your upper spread that you sell, with its floor where market is trading at the time and its ceiling being above where market is trading at the time.
Profit Potential Dispersed Evenly Between The Spreads
The profit potential you are looking for is $25 or more. You want to enter your spreads at the same time and you can leave them on until expiration to give the trade time to play out. If you think $25 is low and you want to increase profit potential, then trade more contracts, just keep the same number of spreads on either side. Based on a profit potential of $25 evenly dispersed between the spreads, the market can make a move of approximately 50 pips in either direction and maintain its position and your trade will have a 1:1 risk reward ratio. However, for this news release it has been found that the market has the tendency to move and then pullback.
There is a low probability the market will move 50 pips. If the market moves approximately 25 pips in either direction your trade is break even. Ideally you want it to pull back directly to center between your spreads for full profit. For every pip away from center, there is $1 less profit potential as every tick on Nadex is $1. Nadex can be traded from 49 countries.
For a full news calendar with strategies to trade each event, you can go to www.apexinvesting.com. To learn more in depth about the Iron Condor strategy see The Awesomeness Of An Iron Condor.