By Darrell Martin
A precursor news event to the very tradable Nonfarm Payrolls news event on Friday is the ADP Non-Farm Employment Change. It is scheduled this month for the day before, Thursday, January 5, 2017 at 8:15 AM ET. It can be traded using an Iron Condor strategy trading Nadex EUR/USD spreads.
Enter the trade as early as 7:00 AM ET for the 9:00 AM ET expiration. Typically, the market will make a move in reaction to the news event and then pull back. With an Iron Condor, the closer the market pulls back to where the market started at entry, the greater the profit made.
To set this strategy in motion, sell one spread above the market and buy one spread below 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. Each spread should have a profit potential of around $15 for a combined profit potential of $30 or more for the trade.
If you have never traded spreads or know only a little about them, the trade can easily be placed using the spread scanner. With its intuitive interface, beginners learn quickly how to trade spreads, and with the multiple features and information at a glance, it’s the ultimate trading tool for advanced traders.
Filters sort through and bring up the markets and spreads in the desired expiration times. Then, for an Iron Condor, simply look at the colored bars and numbers that indicate the risk reward amount for each spread, whether selling or buying. For this trade, as indicated above, use two EUR/USD spreads, each with a $15 profit potential, one bought and one sold. Next, verify the ceiling floor parameters, click the ticket icon and enter the trade. Practice trading the news using a Nadex demo account. Implement the spread scanner to fine tune execution for accuracy and comfort level.
Place stops to further manage risk, should the market take off and not pull back in response to this news. If the combined profit potential is $30, then place stops 60 pips above and below, as this is the location for the 1:1 risk reward ratio points. When the market settles anywhere in between the breakeven points of 30 pips above and below from where the market was at entry, the trade profits. Max profit is made when the market is right between the two spreads at settlement. . More spreads can be traded as long as there is an equal number of spreads being bought as are sold.
Free access to and education for the spread scanner and day trading is available at Apex Investing.