By Darrell Martin
Tuesday, July 21, 2015, at 9:30 PM ET, two reports for Australia will be released: the Consumer Price Index (CPI), which for Australia is released quarterly and the Trimmed Mean CPI. The Australian Bureau of Statistics releases the CPI and the Reserve Bank of Australia releases the Trimmed Mean CPI. The CPI measures the change in the price of goods and services purchased by consumers. The Trimmed Mean CPI is the CPI but excluding the most volatile 30% of items. The Trimmed Mean can show the inflation trend through component weighting and anomaly exclusion. Inflation is important because it can influence interest rate changes.
Trade The AUD/USD Using Nadex Spreads
Usually these kinds of news events have low volatility. A neutral strategy is good for a trade like this and also for when it is unknown which way the market will go. Using Nadex AUD/USD Spreads, an Iron Condor is recommended. Buy a lower spread with the ceiling being where the underlying AUD/USD market is trading at that time, and sell an upper spread with the floor being where the underlying AUD/USD market is trading at that time.
Plotting The Iron Condor On A Chart You Will See Two Stacked Spreads
You want your profit potential to be $35 or more. That may not seem like much however, you can trade more spreads. Just be sure to trade an equal number of spreads on both sides of the Iron Condor. If you plot or draw your spreads on a chart you should have one on top of the other. The ceiling of the lower and the floor of the upper spread should meet close to or where the market is trading at that time.
For this trade you can enter as early as 8:00 PM ET, for 10:00 PM ET expiration times. Based on market analysis of market reaction, from past reports released, typically the AUD/USD will move but then pull back. For the Iron Condor strategy that is what you want the market to do. The closer to your center between the spreads the market comes and is at expiration the greater your profit.
For a more in depth explanation of the Iron Condor see The Awesomeness Of An Iron Condor. Nadex, North American Derivatives Exchange can be traded from 49 different countries. For more on news trades go to www.apexinvesting.com.