Trade Early Morning News The Night Before


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By Darrell Martin

Manufacturing and Industrial Production news for the UK will be released Wednesday, December 7, at 4:30 AM ET. Manufacturing makes up roughly 80 percent of production and can have more impact on the markets than Industrial, making up only around 20 percent. Manufacturing has to keep up with the current business cycles, particularly employment trends and consumer earnings. The report comes out very early in the morning. However, the news can be traded the night before.

The Nadex exchange releases 7:00 AM ET expiring spreads at 11:00 PM ET the night before. This means traders can enter a trade at 11:00 PM ET the evening before. Based on previous market reaction to this news, an Iron Condor strategy makes for a high probability trade. The setup includes two Nadex GBP/USD spreads.

The Advantage Of Buying Below the Market and Selling Above the Market

One spread is bought below where the market is trading and one spread is sold above the market is trading. The ceiling of the bought spread should meet the floor of the sold spread and be where the market is trading at the time. With this trade, both spreads enter with an advantage. The long spread is entered below where the market was trading. The same is also true for the short spread. It is entered above where the market was trading. The market would not have to move at all for the trade to profit. As time expires, the trade collects the premium for profit.

Based on previous average market moves, each spread should have a profit potential of approximately $17 or more, for a combined profit potential of $35 or more. The market can stay where it is, move within a chop range, or make a move and then pull back. All three scenarios will bring a profit for this trade strategy.

Stops can be placed in the event the market moves out of the breakeven zone, to keep risk in reality. Nadex doesn’t have margins because the risk is capped at the floor and ceiling but stops should still be used to keep risk within a 1:1 risk reward ratio. The spot points for this trade would be placed 70 pips above and below from where the market was at entry.

The breakeven zone is 35 pips above and below. The market settling anywhere in between those points means profit is made. How much profit depends on how close to center between the two spreads the market pulls back to. Max profit is made when the market is right between the two spreads at settlement.

Free day trading education and access to the spread scanner for quick, easy, accurate trade execution is available at www.apexinvesting.com.