How To Use A Spread Scanner For Evening News Trading


by Darrell Martin

The National Australia Bank (NAB) Business Confidence report will come out Monday, November 9, 2015, at 7:30 PM ET. At the same time, the Australian Bureau of Statistics will release the Home Loans number. The scheduled news provides market activity, which is conducive for trading, especially using Nadex AUD/USD spreads.

The Business Confidence number is based on a level of diffusion index on 350 surveyed businesses. Questions are asked in order to get a read on the current business condition. The Home Loans number reports the percentage increase of new loans granted for owner occupied homes. Both reports are indicators of economic health.

In order to trade the report’s release, you need to follow an AUD/USD chart. You will want to open the spread scanner to find your desired spreads for the setup. The strategy for this trade is an Iron Condor, known for a wide range or span and as a neutral strategy as opposed to a trending strategy. You can enter this trade as early as 7:00 PM ET for 9:00 PM ET expirations. For an Iron Condor setup, you will buy a lower range spread with the ceiling where the market is trading at the time and you will sell a higher range spread with the floor where the market is trading at the time. With this setup, the ceiling of the lower bought spread should match the floor of the upper sold spread. Those spreads are easy to find using the spread scanner.

Next, you want to be sure that the reward potential is $30 or more combined between the spreads. Look at your spreads in the spread scanner and then look to the far left of the spread you want to sell. You will see the risk/reward potential. Make sure you have around $13 or more there before selling that spread. Then look to the far right of the spread you want to buy and make sure the reward for that spread is also around $13 or more. Once your spreads have a combined reward potential of around $30 or more, enter the trade. Below is an image of the spread scanner showing various AUD/USD spreads.

If $30 doesn’t seem like much to you, you can trade more spreads on each side of the Iron Condor as long as there is the same number on each side. For this scheduled news trade the market typically will react and then pull back. When this happens, one side of your Iron Condor can profit and then after the pull back, the other side may profit at expiration or close to expiration. If the market stays in a tight range close to the center or at center between the spreads, you will also profit on both as time expires. The 1:1 risk/reward ratio point and where to set your stops would be where the market would make a move of 60 pips in either direction, depending on your exact entries. Your breakeven point is where the market moves 30 pips in either direction.

To access the spread scanner go to where you can learn more about Nadex and receive free trading education in many areas.