By Darrell Martin
Wholesale Sales news will be released for Canada Thursday, May 19, 2016, at 8:30 AM ET. When Wholesale Sales numbers are increasing, it is a sign of retailers ordering more and expecting consumers to be spending more. This news release is an opportunity for trading the USD/CAD. A combination of the right instrument with the right strategy makes for profit potential.
The Iron Condor strategy works well with news trades when it is unknown which direction the market will go. For setting up this particular trade opportunity, one buys a Nadex USD/CAD spread below the market and sells a spread above the market.
A spread has a floor and a ceiling designating the range of the market that is traded long or short. This gives the trader the advantage of capped, defined risk unlike trading futures or spot forex with unlimited risk. The ceiling of the bought spread should match the floor of the sold spread and be where the market is trading at the time of entry.
The trade can be entered as early as 8:00 AM ET for 10:00 AM ET expiration and the profit potential should be $30 or more, which would be approximately $15 or more on each spread. The spread scanner, designed as a tool for traders to easily trade and learn to trade spreads, is used frequently by experienced traders to quickly at a glance find the right spreads. All pertinent information on the spreads is found in the same window making trading more effective.
Based on previous market reaction and moves from this news event, it was found that the average move was around 30 pips, and then the market would pull back. For management of risk, stop limit orders can be placed at the 1:1 risk/reward ratio points, where the market would hit 60 pips above or 60 pips below. That is a total 120-pip range for the market to move around in. The breakeven points are 30 pips above and below, making a 60-pip range for possible profit.
If the market settles anywhere between the breakeven points, the trade makes profit, with max profit being when the market settles right between the two spreads. At settlement, the trader will receive the amount paid to enter the trade plus or minus any profit or loss respectively.
A full news calendar is available with free education and access to the spread scanner at www.apexinvesting.com.
