By Darrell Martin
This news report is scheduled eight times a year by the European Central Bank (ECB) regarding short-term interest rates, which can seriously affect currency valuation. On Thursday, April 21, 2016 at 7:45 AM ET, the Minimum Bid Rate will be released. You can trade this bit of news using Nadex spreads entering as early as 6:00 AM ET for an 8:00 AM ET expiration.
This trade strategy is an Iron Condor using two spreads: one bought Nadex EUR/USD spread below the market but with its ceiling where the market is trading at the time, and one sold Nadex EUR/USD spread above the market, but with its floor where the market is trading at the time. A Nadex spread is an option designed for day traders to trade a range of a specified market, between the floor and ceiling numbers. A spread can be traded long or short but profit and loss is capped at the floor and ceiling. The trader knows ahead of time what the max risk is. Risk is still managed to a 1:1 risk/reward ratio.
For this trade, the profit potential is $20. That may not seem like much, however, you can trade more spreads as long as you have the same number on the top as the bottom. To find the right spreads with the right profit potential, use the spread scanner designed for learning and trading Nadex spreads quickly and easily. Open the scanner at www.apexinvesting.com available free to all traders, and have your Nadex demo or live account open as well. Then, choose your market. For this trade, it is the EUR/USD. Look at spreads expiring at 8:00 AM ET, both on the sell side and buy side with a reward potential of $10 or more, so combined you will have $20 or more. Once you find spreads with the right reward potential, your floor and ceiling parameters will fall into place. Click the ticket icon next to the spread and enter your order information. Then click submit and your order will be immediate.
After placing your order, be sure to place stop limit orders. They should be placed at the 1:1 risk/reward ratio points, where the market would be if it went up or down 40 pips. That is where the risk would be $20 for the trade. After the news, the market can either make a move and pull back, or stay in a range and you can profit. When the market goes right back to center between the two spreads is where max profit is achieved.
Apex Investing offers free education on Nadex spreads and binaries along with futures, forex and CFDs. Nadex is a CFTC regulated US based exchange and can be traded from 48 different countries.
