By Darrell Martin
Canadian Foreign Securities Purchases, also known as International Transactions in Securities, will be released Monday, April 18, 2016, at 8:30 AM ET. Foreigners who buy domestic stocks, bonds, and money-market assets must purchase them with domestic currency, thus linking the demand for each. There is a recommended trade tip for this news event based on previous market reaction and using Nadex spreads with an Iron Condor strategy.
The trade can be entered as early as 8:00 AM ET for 10:00 AM ET expirations. The profit potential should be $30 combined between the spreads, so $15 approximately each spread. A spread has a floor and a ceiling designating the range of a market you can trade. The spread can be traded long or short and you can’t win or lose past the floor or ceiling. The advantage is the max risk is capped and defined up front.
To set up for this trade tip, buy a Nadex USD/CAD spread below the market but with the ceiling where the market is trading at the time. The reward potential should be around $15 or more. In addition, sell a Nadex USD/CAD spread above the market and its floor should meet the ceiling of your other spread and also be where the market is trading at the time. The reward potential should be $15 minimum as well.
There is a way to find the spreads you need instantly at a glance. At the time of entry, just open the spread scanner accessible at www.apexinvesting.com. Choose the USD/CAD market. Look for the spreads expiring at 10:00 AM ET, and for a buy and a sell with a reward potential of $15 or more. Verify those spreads meet the floor and ceiling parameters. Click the ticket icon and confirm your order information. You will need a Nadex demo or live account as well, which is easy to open. See the spread scanner image below.
You pay the max risk up front to enter the trade, but at settlement, you get that amount back plus your profit or less your loss. Set stop limit orders where the market will hit 1:1 risk/reward ratio points moving up or down 60 pips. Max profit is when the market makes a move and comes back to center; right between the two spreads and is there at expiration. For every pip away from the center the market is at expiration, it is $1 less in profit.
For more news events to trade and strategies to trade them, visit www.apexinvesting.com. Nadex is a CFTC regulated exchange based in the US and can be traded from 48 different countries.
