By Darrell Martin
For the first time since the financial crisis of 2008, it is expected the Bank of England will cut interest rates. The EU referendum result, known as the Brexit, has caused uncertainty, and growth forecasts will most likely be lowered by a significantly large margin. All of this will come out Thursday, August 4, at 7:00 AM ET, as the Bank of England releases the following news:
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Inflation Report
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Official Bank Rate Votes
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Monetary Policy Summary
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Official Bank Rate
This is a tradeable event for an Iron Condor strategy trading GBP/USD spreads. One spread can be bought below the market with the ceiling where the market is trading at the time and one spread can be sold above the market with the floor where the market is trading at the time. Both spreads should have a profit potential of around $15 or more for a combined profit potential of $30 or more. Enter at 6:00 AM ET for 8:00 AM ET expirations. If the profit potential isn’t there then there is no trade.
To determine where the stops should be placed, simply double the profit potential and place the stops that many pips up and down from where market was at entry. For example, on this trade the suggested combined profit potential is $30, then place stops 60 pips above and 60 pips below.
After the news is released, the market tends to make its move and then pull back. As long as the market settles anywhere within the breakeven points, the market price area between where the market would hit 30 pips above and below, the trade will make some profit. Max profit is when the market is right between the spreads at settlement.
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