By Darrell Martin
Markit, the Financial Information Services Company, will be releasing the Purchasing Manager’s Index for manufacturing later this week on Friday, April 1, 2016 at 4:30 AM ET. This is a level of diffusion index, and a number above a 50.0 means industry expansion and below indicates contraction. The report is created from a survey of approximately 600 purchasing managers which are asked about the state of business conditions including inventories, orders and employment production.
This report is released very early in the morning on Friday. However, the trade strategy is low risk and can be placed the night before as early as 11:00 PM ET for 7:00 AM ET expirations. The recommended strategy, based on previous market reaction to 12 - 24 past reports, is a Straddle using Nadex spreads. The maximum risk is $40 or less and you’re looking for a $40 profit.
The Straddle gets the name from its actual positioning of the spreads to the market. The trade literally straddles the market by buying a Nadex GBP/USD spread with its floor where the market is trading at the time, and selling a Nadex GBP/USD spread with its ceiling where the market is trading at the time. Each spread should have a maximum risk of $20 or less. Going for a $40 profit, you can set your limit take profit orders where the market hits up or down 80 pips. Where the market hits 40 pips up or down are your breakeven points.
With this trade, there is no need for stops since the risk is so low, you can just set it and forget it. Finding the right spreads is easy using the spread scanner at www.apexinvesting.com. It is designed for traders to see all the necessary information on the spreads at a glance in one window and submit orders instantly. Just click the ticket icon and you can enter and submit your order.
Nadex is a US based CFTC regulated exchange and can be traded from 48 different countries. To learn more on how to trade futures, forex, CFDs as well as Nadex binaries and spreads, just visit www.apexinvesting.com.
