By Darrell Martin
Friday, July 17, 2015, at 8:30 AM, Statistics Canada will be releasing the latest numbers for the Core Consumer Price Index (CPI) and the CPI. The CPI is the change in the price of goods and services purchased by consumers and the Core CPI is that change but not including the eight most volatile items. This is a report that is released around 20 days after the month ends and is released monthly.
It is forecast the change will be -0.1 percent, however, previous actual was 0.4 percent while the forecast had been 0.3 percent. Actual being greater than forecast is good for currency. To trade this event, though, we don’t need to be concerned with increases or decreases. The strategy recommended is neutral and called an Iron Condor which is good for when you don’t know which direction the market is going to go and good for when you need a low risk strategy.
Trade This Event With Nadex Spreads
To set up the Iron Condor you use Nadex Spreads and for this trade you want Nadex USD/CAD spreads which are a derivative of the underlying USD/CAD market. You can enter your trade at 8:00 AM for 10:00 AM expirations. Buy a lower spread with the ceiling being where the underlying market is trading at that time. Sell an upper spread with the floor being where the underlying market is trading at that time. If you plotted the spreads on a USD/CAD chart you would see they are right on top of each other.
Spreads Offer Defined Risk, Can’t Lose Past the Ceiling or Floor
With spreads you can’t lose past the floor on a bought spread and you can’t lose past the ceiling on a sold spread. This is also the case with profits. You can profit up to the ceiling on a bought spread and profit down to the floor on a sold spread. So for an Iron Condor, the greatest profit is achieved when the market is right between the two spreads i.e., the ceiling of your bought lower spread and the floor of your sold upper spread.
For this trade you want to look for spreads that will give you a combined profit potential of $30 or more. If this seems too little, then you can always trade more spreads, just be sure to have the same number of spreads on each side of your Iron Condor. Based on market reaction to past reports, it is anticipated the market will react, make a move and then pull back. The closer it pulls back to the center of your Iron Condor the higher profit you make. You can leave your trade on until expiration to let it play out. To see an example of an Iron Condor trade read The Awesomeness Of An Iron Condor. For greater education in trading go to www.apexinvesting.com. Nadex Spreads and Binaries can be traded from 49 countries.