By Darrell Martin
Looking for markets in which to place overnight trades? News usually brings movement in the market and two countries have news releases scheduled for early Wednesday, June 13, 2018.
The Swiss Federal Statistical Office will release the Producer Price Index (PPI) at 3:15 AM ET. This is a leading indicator of consumer price inflation as it measures the change in prices of goods sold by manufacturers. Both the PPI for month over month (MoM) and year over year (YoY) reports will be released.
At 4:30 AM ET, the UK Office for National Statistics will release 14 different reports pertaining to Consumer Price Index (CPI), Retail Price Index (RPI), PPI, and House Price Index. These reports vary in importance from low to high but all can cause some movement in the market. However, since the direction of the movement is unknown, consider an Iron Condor strategy. This strategy is utilized by simultaneously buying and selling two spread contracts.
For each Iron Condor, one spread is bought below with a second sold above where the market is currently trading. The ceiling of the bought spread should meet the floor of the sold spread and be where the market is trading at the time of entry. These spread contracts are for the same market. For example, to trade the Swiss news, buy one USD/CHF spread and sell one USD/CHF spread.
The Iron Condor strategy profits when the market ranges or makes a move and then pulls back. Additionally, the range in which the market can settle and the trade can profit is quite large. The beauty of using CFTC regulated Nadex spreads is the built-in defined risk, which is specified before entering any trade. There is never a margin call or the chance of being stopped out.
As early as 11:00 PM ET, Tuesday, June 12, utilizing Nadex spreads, traders can place trades on the GBP/USD or the USD/CHF markets. Use the 7:00 AM ET expiry. Minimum profit should be $35 with each spread having a profit potential of at $17. If the specifications cannot be met, there is no trade. Never force a trade.
This is a low risk trade. It can be put on the night before and then not checked until morning. However, once place, risk can be further managed by placing stops at the 1:1 risk/reward ratio points where the market would hit 70 pips above or below where it was at entry. As long as the market settles between the breakeven points of 35 pips above and below where the market was at entry, some profit will be realized. The greatest profit will be made if the market settles right between the two spreads.
To learn other trading strategies, visit ApexInvesting.com.