By Darrell Martin
Tuesday, August 1, at 8:30 AM ET, US will release news of Personal Spending and Core Personal Consumption Expenditures, also known as PCE or CPI. Then at 10:00 AM ET, the Institute for Supply Management (ISM) will release the Manufacturing Purchasing Manager’s Index (PMI). Both events can be traded based on previous market action in response to these scheduled news events. Trading Nadex EUR/USD spreads and using the Apex Spread Scanner Pro, traders can find spreads with high-implied volatility and set up Iron Condor strategies.
An Iron Condor includes two spreads. One spread is bought below market and one spread is sold above the market. The ceiling of the bought spread should meet the floor of the sold spread and be where the market is trading at the time. When implied volatility is high enough, then spreads can be bought and sold far enough apart, creating a significant range where, as time expires and price settles or pulls back, profit can be made.
Trade 1
For the 8:30 AM ET news, entry can be as early as 7:00 AM ET for 9:00 AM ET expiration. For this trade, the profit potential should be a minimum of $25 or more. Each spread should then have at least $12 - $13 reward potential or no trade.
The breakeven points for this trade at $25 profit potential would be 25 pips above and below from where the market was at entry. The market settling anywhere between those points will bring profit. Stops can be placed using the Scanner Stop Trigger. For this trade, where the market hits 1:1 ratio points is 50 pips above and below from where the market was at entry.
Trade 2
For the 10:00 AM ET news, entry can be as early as 9:00 AM ET for the 11:00 AM ET expiration. In this trade, the combined profit potential should be a minimum of $30. Each spread should have a $15 or more profit potential.
The second trade, having $30 or more profit potential, would mean breakeven points are at 30 pips above and below from where the market is at entry. The 1:1 risk reward points and where to place stops would be 60 pips above and below from where the market was at entry.
Besides the EUR/USD market moving, the US indices also react to scheduled news. Be sure to always be aware of scheduled news events.