It's Premium Collection Time While You Sleep

The Trade Balance for the UK will be released Friday at 4:30 a.m. ET. This can be a nice news event to trade however; the trade recommendation is for entering the evening before at 11:00 p.m. ET to save traders sleep. No one wants to get up in the middle of the night so fortunately, with this trade you won’t have to.

The difference between imported and exported goods is what determines a trade balance. A positive number means more goods were exported than imported. This is positive for two reasons: one, foreigners must buy domestic currency to pay for their purchases, and two, high export demand can mean higher manufacturing production.

How can you trade this at 11:00 p.m. ET the night before if the event doesn’t come out until 4:30 a.m. ET? Using Nadex GBP/USD Spreads, you can put your Iron Condor strategy trade on for 7:00 a.m. ET expirations. An Iron Condor has two spreads in the strategy. One spread is bought below the market with the ceiling where the market is trading at the time and the other spread is sold above the market with the floor where the market is trading at the time. You want your trade to have a profit or reward potential of $35 or more. Therefore, each spread should have a reward potential of around $17 or more. This can be seen on the spread scanner.

To easily find your spreads with the right ceiling and floor, the right profit potential and to enter trades easily, go to the spread scanner on www.apexinvesting.com, which is available for free access.

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This is a premium collection trade. This means that as the trade is expiring, you will be collecting the premium that implied volatility built into the prices. Essentially, you are buying below the market and selling above the market. Depending on your exact entry, the market can move up or down 35 pips and your trade is still break even. You can put stops at the points where the market would move up or down 70 pips; that’s where the 1:1 risk reward ratio points are.

One side may profit before the other side, or the market may just stay in a tight range and expire right around where it was when you entered. This would be ideal, since max profit is achieved when the market is centered right between your spreads at expiration. This would mean you have collected the entire premium.