By Darrell Martin Who wants to stay up in the middle of the night to trade? Well, supposing the profits are high enough, then you might want to. However, most people would like to sleep. These news events which come out at 4:30 AM ET Friday, May 1, 2015, can actually be traded with a trade setup entered the night before at 11:00 PM ET Thursday, April 30, 2015.
There are four reports coming out:
Net Lending to Individuals
M4 Money Supply
Manufacturing PMI is released by Markit and PMI stands for Purchasing Manager’s Index. Released monthly, it is based on surveyed purchasing managers in the manufacturing district and is an indicator of business conditions. The Bank of England releases the other three reports. Net Lending is the change in total value of new credit issued to consumers and is correlated to consumer confidence. M4 Money Supply reports the change in domestic currency in circulation, including what is deposited in banks. Different levels of circulation at differing times in an economic cycle can lead to inflation. Mortgage Approvals gives the number of new mortgages approved for housing. All the reports give pertinent information on the British economy.
With news being released, Implied Volatility can build up in the markets. For this news event, an Iron Condor using Nadex spreads is recommended. Nadex offers spread and binary derivatives of underlying markets. To set up your Iron Condor, sell an upper Nadex GBP/USD spread and buy a lower Nadex GBP/USD spread. Enter as early as 11:00 PM Thursday for 7:00 AM Friday expirations. The upper spread’s floor should be where the then current underlying GBP/USD is trading, and the lower spread’s ceiling should be where the then current underlying GBP/USD is trading. Be sure your Iron Condor has a profit potential of $35 or more.
The reports are released at 4:30 AM Friday, and the market is anticipated to move after the release of news reports and then pull back. You can leave the spreads on until expiration giving them plenty of time to play out. For max profit the market needs to pull back to the center between your spreads. The closer to center the higher your profit potential. However, for a 1:1 max risk reward ratio with this Iron Condor strategy, the market can move as far as 75 pips in one direction and not pull back. Apex Investing analyzes the markets after news events and has found that the market moved an average of approximately 35 pips and then pulled back. Nadex binaries and spreads can be traded from 49 countries. To see a complete calendar of news events and strategies to trade them go to www.apexinvesting.com.