By Darrell Martin
The Bureau of Labor Statistics is releasing the Nonfarm Employment change, also known as nonfarm payroll. This is the change of employed people in the previous month, excluding the farming industry. Job growth highly influences consumer spending which makes up the majority of economic activity. For this reason, the report tends to move many markets and the movement can be significant. Below are two strategies for trading this news event released at 8:30 AM ET on Friday, April 1, 2016.
The first strategy, known as the Iron Condor, has recommended combined minimum profit goals based on the ranges of market reaction to the news over the past 12 months. Buy a lower Nadex spread with its ceiling where the market is trading at the time and sell an upper Nadex spread with its floor being where the market is trading at the time. You can enter as early as 7 AM ET for 3 PM ET expirations. The spreads will be wide at that time. Alternatively, you can enter at 8 AM ET for 10 AM ET expirations.
Your Iron Condor should have a combined ideal minimum profit as mentioned below and you should set stop limit orders as well. For example, for Nadex AUD/USD, set two stop limit orders: one where the market would hit approximately 100 pips above and another where the market would hit 100 pips below. Depending on your exact entries, that is where your max 1:1 risk/reward ratio points are. Max profit for the Iron Condor is when the market is in center, back between your two spreads at expiration. Also, be sure to place limit take profit orders. The market may make a move for one side to profit and then pull back and then the other side may profit later as well.
A Straddle is another possible strategy for this news event. To put on a Straddle, you do the opposite of above with the Iron Condor. With the Straddle, buy a Nadex spread above the market but with the floor where the market is trading at the time and sell a Nadex spread below the market but with the ceiling where the market is trading at the time. Using the chart below, you can see each market with the minimum risk and take profit setups. For example on the AUD/USD, each spread should have a maximum risk of approximately $25 for a combined risk of $50. Set your limit take profit orders immediately after placing your trade where the market would hit 100 pips above should the market go up and also 100 pips below should the market go down. Be aware of the deviation levels when trading your straddles and take profit before a deviation level. Each market has its own maximum combined risk and take profit points up or down.
Nadex is a CFTC US regulated exchange and can be traded from 48 different countries. To learn more on how to trade the news with Nadex binaries and spreads and for more on trading futures, forex, and CFDs, go to www.apexinvesting.com
