By Darrell Martin
Wednesday, March 9, 2016, Bank of Canada will release the Rate Statement and Overnight Rate reports at 10:00 AM ET. The Rate Statement includes the outcome of their decision on the interest rates and economic conditions to influence them. The Overnight Rate is the rate financial institutions borrow and lend overnight between themselves. It’s forecast to remain at .50 percent
This news, scheduled eight times a year, tends to move the USD/CAD. It tends to move far enough for a good Straddle strategy, using Nadex spreads and risking a maximum of $40. The Straddle strategy is exactly that, a strategy that straddles the market making for profit potential in either direction, when the market makes a strong move.
A spread allows you to trade a range of a specific market. It has a floor and a ceiling, and you can trade it either long or short, but you can’t win or lose past the floor or the ceiling. Having a floor and a ceiling, you know what your risk is upfront. It is defined and it’s capped, unlike trading futures or spot forex, which have unlimited risk and margin calls.
Straddle The Market, Be Ready To Profit Either Direction
For this trade, you want to buy a Nadex USD/CAD spread with the ceiling above the market and the floor right at where the market is trading. You also want to sell a Nadex USD/CAD spread with the floor below the market and the ceiling right at where the market is trading. With a Straddle strategy, the market can go up or down and you are setup ready to profit. With a $40 combined risk between the spreads, your 1:1 risk reward ratio points are where the market hits 80 pips up or down. That is where to place your limit take profit orders.
You can enter as early as 9:00 AM ET for 11:00 AM ET expirations. Once the news is announced, the market tends to move and one side can profit. You can leave the other side on, however, if the spread pulls back, you may make some profit on that one as well or break even on it. With this strategy, since the risk is so low, $40 or less, there is no need for any stops. You can just let it ride.
Using the spread scanner designed to easily find the Nadex spreads for your trade at a glance, go to www.apexinvesting.com. Once opened, simply choose your market and you will see the spreads with their floors and ceilings listed down the center. Their risk reward levels will be on the outside right for buying and left for selling.
To learn more on how to trade the news and more on how to trade Nadex spreads and binaries as well as futures, forex and CFDs visit www.apexinvesting.com. Nadex is a CFTC regulated US based exchange and can be traded from 48 different countries.
