By Darrell Martin
Retail Sales and Core Retail Sales were up for the month of February, 2.2% and 1.7% respectively, as reported in March. Every province had an increase in retail sales. The reports for March are due out Wednesday, April 26, at 8:30 AM ET, and make for a trade opportunity with the right strategy, and the right instrument.
Nadex is a US based, CFTC regulated exchange listing binary and spread options. The benefit of trading either instrument is capped, known risk upfront. There are strategies using spreads like the Iron Condor for trading scheduled news events that can profit regardless of the direction the market goes. Since market reaction to any news event is unpredictable, a strategy with directional flexibility can be an advantage.
The Iron Condor Strategy Trading Two Nadex USD/CAD Spreads
The Iron Condor has two spreads. Typically, the market will react to the news, then pull back and on the pull back, the Iron Condor will profit while time expires. One spread is bought below the market with the ceiling where the market is trading at the time. The other spread is sold above the market with the floor where the market is trading at the time. For this trade opportunity, each spread should have a profit potential of $15 or more for a combined profit potential of at least $30.
Buying below and selling above the market with a $15 profit potential means the price to enter the spreads are approximately 15 pips below and above where the market is at entry. As the market moves in either direction, it can go as far as 30 pips up or down, to the breakeven points, and make some profit. Once the market goes beyond those points, then the trade is losing, with 60 pips up or down being the 1:1 risk reward ratio points and where stops should be placed.
The spreads can be entered as early as 8:00 AM ET, for 10:00 AM ET expiration. As time runs out, and should the market pull back, the closer the market gets to center between the spreads, the greater the profit will be. More spreads can be traded as long as each side has an equal number of spreads.
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