Trade The Philly Fed Manufacturing Index News Coming Out Thursday

Manufacturing companies have to stay abreast of changing economic conditions in order to make fast adjustments in their businesses. Wrongly anticipating the market can mean costly mistakes in employment, inventory and supplies, just to name a few. For these reasons, the Federal Reserve of Philadelphia surveys over 250 manufacturing companies on business conditions, then releases a level of diffusion index. A number above 0.0 means improving conditions and below 0.0 means declining conditions. Regardless of the results of this news release, using an Iron Condor strategy with Nadex spreads is a trade poised to capture profit in either direction. The news is released at 8:30 AM ET, Thursday, April 21, 2016.

With an Iron Condor, you trade two spreads. There is usually some kind of expected distance or recommended profit potential for a particular move. This news trade, based on previous market reaction, calls for a $25 or more profit potential. This may seem low and you can always trade more spreads, as long as you have the same number on both sides. When choosing your spreads, you want each one to have a profit potential of around $12 or more per spread. To set up the strategy, buy a Nadex EUR/USD spread with the ceiling being where the market is trading at the time, and sell a Nadex EUR/USD spread with the floor being where the market is trading at the time.

You can enter the trade at 8:00 AM ET for 10:00 AM ET expiration. The setup is easy to do using the spread scanner, where all the spread information can be seen in one window. It is accessible at www.apexinvesting.com free for all traders. Once you select your market, the spreads are listed down the center showing their floors and ceilings. Their risk/reward potential is listed to the left when selling the spread, and to the right when buying the spread. Below is an example shot of the Nadex EUR/USD spreads listed on the scanner.

To view a larger image click HERE.
EUR/USD

Once you place your trade, you should also set your stop limit orders. With this strategy, you are buying below the market and selling above the market with the anticipation the market may move but will either pull back to somewhere between the spreads or stay range bound. When the market pulls back to center between the spreads and is there at expiration is max profit. For this trade, the market can move as far up or down as 25 pips and you trade will have hit the breakeven points. If the market is in between those points at expiration, you will profit. Where you want to place your stops is at the 1:1 risk/reward ratio points. This is where the market moves up or down 50 pips. Keep in mind, based on previous market reaction to this past news event, the market has tended to move and then pull back and a profit potential of $25 has been recommended.

For a complete news calendar of events and strategies to trade them, go to www.apexinvesting.com. There you will find free education on how to trade Nadex binaries and spreads, as well as futures, forex and CFDs. Nadex is a CFTC regulated US based exchange and can be traded from 48 different countries.