By Darrell Martin
On Wednesday, February 7, at 8:30 AM ET, Statistics Canada will release one report concerning building permits, which could impact trading. This is of medium importance. In various aspects, this report measures changes happening in Canada’s economy. The report may affect the market and offer a trade setup as a result.
News reports of this nature are known to cause movement and volatility in the market. Usually, reactions to such news experience a pullback after market movements. How the market will move remains unknown at present.
A trader can set up a trade with this information to be advantageous. The Iron Condor strategy uses two Nadex USD/CAD spreads to collect a premium and potentially profit. One spread is purchased below the market as another spread is sold above the market. At the time of entry, the floor of the sold spread ought to meet the ceiling of the bought spread while being where the market is trading.
Collecting Trade Premium
As the market fluctuates up and down with this strategy, when the market pulls back to the center, both spreads can profit. The result is a collection of premium.
Risk can be maintained to further remain a realistic 1:1 risk reward potential. With this strategy, there is no risk outside the floor and ceiling of spreads.
This trade type can be entered as soon as the 10:00 AM ET expiring spreads become available to trade at 8:00 AM ET Wednesday morning. This is an exemplary trade to demonstrate market reactions concerning relations between news events and Nadex spreads.
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