By Darrell Martin
The US Census Bureau is releasing the Core Retail Sales and Retail Sales this Tuesday, June 14, at 8:00 AM ET. Both reports measure the change in value of sales at the retail level. Core Retail Sales excludes automobiles as auto sales can account for 20% of sales, tend to be volatile and can distort the numbers.
These reports, usually released together, can move the EUR/USD on average as much as 35 pips. Typically, after the move, the market will pull back. With that information, a strategy can be chosen to trade the event.
The tricky thing with market reaction after news is to know which way the market is going to move. A strategy that has possibility of profiting, whichever direction the market moves, is needed. Also, consider if the market typically pulls back.
Spreads Have Capped Risk
The Iron Condor strategy is one that involves buying below the market and selling above the market, with certain profit potential parameters. The instruments well suited for this strategy are Nadex spreads for day trading. Spreads have capped risk, since only the range of the market specified by the spread’s floor and ceiling is traded. The spread can be traded long or short and there is no losing or profiting past the floor and ceiling.
For the setup, a lower range spread is bought below the market, with its ceiling where the market is trading at the time, and with a profit potential of around $17 or more. Additionally, an upper range spread is sold above the market, with its floor where the market is trading at the time and with a profit potential of around $17 or more.
For this trade, entry would be at 7:00 AM ET with an expiration of 9:00 AM ET. Looking in the right expiration time, then finding spreads with the $17 profit potential is a quick way to identify them on the spread scanner. Once spreads with the qualifying profit potential are known, the ceiling and floor parameters can be verified. The spread scanner is designed specifically for one window, at a glance, utilizing Nadex spread trading. For a glimpse of the layout, see the image below.
Typically, the market pulls back after the news and the expectation is that it will pull back close to where it started, thus creating profit for the trade. Stops need to be placed in case the market takes off and doesn’t pull back. With a combined profit potential of $35 or more, stops should be placed where the market would hit 70 pips above and below from where it started. At those points, there is a 1:1 risk reward ratio.
Free trading education and use of the scanner are available at www.apexinvesting.com.
