By Darrell Martin
Manufacturing and industrial production can be big indicators for the health of an economy. Businesses react quickly to economic conditions. The Office For National Statistics will be releasing the Manufacturing and Industrial Production reports for the UK on Tuesday, January 12, 2016, at 4:30 AM ET. These reports can be traded and the night before, using Nadex spreads and placing an Iron Condor strategy trade.
This is a great strategy to enter the night before, Monday at 11:00 PM ET, for a 7:00 AM ET expiration. Just buy a Nadex GBP/USD spread below the market with the ceiling or top of the spread where the market is trading at the time and sell a Nadex GBP/USD spread above the market with the floor or bottom of the spread where the market is trading at the time. This trade should have a profit potential or reward potential of $35 or more combined between the spreads. Your goal is for the market to either maintain its position or move and then pull back, but basically be between the two spreads at expiration for max profit. Fortunately, this is how the GBP/USD tends to react for this report.
Spreads allow you to trade the part of the market that is between their floor and ceiling. You can trade them long or short. The price you pay to enter a spread happens to be the total risk of the spread. The risk is therefore, defined upfront and capped so there is no margin call. At exit or expiration, you are paid back this amount plus or minus your profit or loss respectively. You can exit at any time and also set stop limit orders so you’re not risking the total amount paid to enter.
For this trade, you would set up stop limit orders to manage your risk. At the 1:1 risk reward ratio points, it is recommended you place them 70 pips up or down from your entry point. Your breakeven point on this trade is 35 pips up or down. You want the market to stay between those points. Once the reports are released and the information is out, the market could move and one side of your Iron Condor trade could profit. Leave the other side on though and wait. The market may pull back and that is when the other side would profit. Conversely, the market just may stay where it was at the beginning, which could work as well for you to profit. The closer to expiration you are with the market being between your spreads or very close to it, the more premium you will collect in the trade, bringing your profit up.
The Iron Condor is an excellent strategy for a range bound market and it is a neutral trade, meaning it doesn’t matter which direction the market moves. If $35 doesn’t seem like much for profit, then consider trading more contracts. Just be sure to have the same number on both sides of the trade. To easily find the spreads you need for your trade go to www.apexinvesting.com for free access to the spread scanner. You must also be logged into a demo or live Nadex account, but the spread scanner has an intuitive design for traders to easily scan and pick their choice of spreads.
At www.apexinvesting.com, you will find free education on how to trade Nadex binaries and spreads, as well as forex, futures and CFDs. Nadex is a US based CFTC regulated exchange and can be traded from 48 different countries.
