Nighttime News Trade With Nadex Spreads


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By Darrell Martin

The Australian Bureau of Statistics releases the Australian Current Account quarterly. The next release is Monday, December 5, at 7:30 PM ET. The Current Account is the difference between the value of imported and exported goods, services, income flows and unilateral transfers. If the actual amount is greater than what is forecast, then it is good for currency. Currency demand is directly linked to the Current Account, as foreigners need to make their purchasing transactions in the domestic currency.

This is a scheduled news event that traders follow and react to, which can create implied volatility in the markets and in Nadex AUD/USD spreads. With the right amount of implied volatility, traders can trade this event with an Iron Condor strategy. The Iron Condor is set up with two spreads.

One spread is bought below the market and one spread is sold above the market. The ceiling of the bought spread should meet the floor of the sold spread and be where the market is trading at the time. This strategy setup is ready to profit once the news is released and the market makes its reactionary move and then pulls back. The closer the market pulls back to exactly where it was at entry, the greater the profit made on the trade.

Entry for this trade is 7:00 PM ET, when the 9:00 PM ET, expiring spreads are released. When choosing the spreads, each one should have a profit potential of $12 or more for a combined profit potential of $25. More spreads can be traded as long as both sides of the Iron Condor have the same number.

If the market doesn’t make a pullback, then stops are set to limit losses to a 1:1 risk reward ratio. To set the stops, simply double the amount of combined profit potential and place stops that amount of pips up and down. For this trade, those points would be 50 pips above and below from where the market was at entry. As long as the market stays within the breakeven zone, between the points of 25 pips above and below, the trade will make a profit.

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