New Building Permits For Canada Makes For A Nadex USD/CAD Iron Condor

Tuesday, December 8, 2015 at 8:30 AM ET, Statistics Canada will release Building Permit information. This is a percentage, measuring the change in total value of new building permits issued. To know the best strategy to trade a news event, you need to know if the market typically reacts in a consistent way and by how much. For this event, it has been found that an Iron Condor neutral strategy using Nadex USD/CAD spreads with a profit potential of $30 works well. That gives the market a range to move 30 pips up or down. The spreads expiring anywhere within that range will give you a profit. This was based on market reaction from the last 12 - 24 releases.

How do you set up an Iron Condor with a $30 reward or profit potential? First, an Iron Condor is a strategy trading two spreads. For this trade, you trade two Nadex USD/CAD spreads. You want to sell a spread above the market with a potential to profit around $15. To do this you need to sell your spread with its floor or bottom of the spread should where the market is trading at the time but it needs $15 of reward potential. You also need to buy a spread below the market but with it still having $15 of reward potential and its ceiling being where the market is trading at the time.

Looking at the spread scanner accessible from www.apexinvesting.com to easily find your Nadex spreads, you can see the reward potential in the far left column for sells and the far right column for buys. Below is an example of the spread scanner displaying USD/CAD Nadex Spreads. You see the spreads listed down the center with the floor number on the left and the ceiling number on the right.

To view a larger image click HERE.

To access the spread scanner, all you need to do is be logged in to a demo or live account with Nadex. Either is easy to setup however, be sure to demo trade and get execution down before live trading. You can enter this trade as early as 8:00 AM ET for 10:00 AM ET expirations. You may have to wait a bit for the spreads to meet all the parameters before you can enter. Once you have entered, you may want to set stops. Your stops should be set where the trade would hit a 1:1 risk reward ratio. Depending on your exact entries, for this trade strategy the 1:1 risk reward ratio points are when the market moves 60 pips above or below from where it started when you entered.

Max profit for this trade is the trade expiring and the market coming to be right where it was when you entered the trade. Therefore, as long as the market stays in the approximately 60-pip range from where you sold your top spread and bought your lower spread, you will make some profit. For every one pip the market is away from the center between your spreads, it will be less $1 of profit. If you want more profit potential than $30 on the trade, you can trade more spreads. Be sure to trade the same number on each side of the Iron Condor.

Nadex can be traded from 49 different countries and is a US based exchange regulated by the CFTC. To learn more about day trading and access the spread scanner, go to www.apexinvesting.com.