By Darrell Martin
Coming up on Friday, December 11, 2015 at 8:30 AM ET, consumer and producer sales information will be released. This release can make for a nice Iron Condor strategy trade. Retail Sales and Core Retail Sales have to do with the change in retail sales and retail sales excluding automobiles, for a less volatile percentage number. PPI and Core PPI have to do with the change in the price of finished goods and services sold by producers, and then that percentage excluding food and energy, also for a less volatile number. Retail sales tells of consumer spending which accounts for the majority of economic activity. Producer pricing information tells of any inflation signs.
This can be a nice time to trade the EUR/USD using Nadex EUR/USD spreads with an Iron Condor strategy. To set it up, you want to buy a lower range spread below the market with the ceiling where the market is trading at the time and sell an upper range spread above the market with the floor where the market is trading at the time. Your spreads should have a reward or profit potential of $35 combined between them.
To easily find your spreads at a glance, you need to have a Nadex demo or live account and be logged in to either. If you don’t have an account, you can open one in just minutes. Then, go to the spread scanner at www.apexinvesting.com. Below you can see the spread scanner displaying EUR/USD spreads.
You will find all the spreads listed down the center and the reward potential for them listed on the outside. For selling a spread, look at the reward on the left and for buying a spread, look at the reward on the right.
This news is released at 8:30 AM ET, so you can enter as early as 7:00 AM ET for 9:00 AM ET expirations. Don’t enter until you find spreads meeting all the above parameters.
On first look, it may seem like a lot to risk for this amount of profit. For this news event however, the market tends to either react, make its move and pull back or stay in a range, which works well for this strategy. The Iron Condor is profitable when the market moves this way. In fact, it is at max profit when the trade expires and the market hasn’t moved but is right where it was when you entered.
This strategy also allows the market to move a great many pips before being at a loss or break even. Depending on your exact entries, if your profit potential is $35, then the market can move up or down 35 pips and your trade is at the break even points. Again, depending on your exact entries, the market can move up or down 70 pips and that is your 1:1 max risk/reward ratio where you would place stops or exit the trade to manage your risk. So, you see at entry, it may seem like a lot to risk, but remember you will manage your risk by exiting at the 1:1 max risk/reward point should the market go there. A very important note to make as well, Nadex never has margin calls because of capped risk, again another way of managing your overall risk.
To learn to trade Nadex, binaries, spreads as well as futures, forex and CFDs, just go to www.apexinvesting.com for free education. Nadex is a US based CFTC regulated exchange and can be traded from 49 different countries.
