Straddle The EUR/USD In Preparation For US Trade Balance

On Wednesday at 8:30 a.m. ET, the U.S. Trade Balance will be released. The forecast calls for it to come in around -$40 billion. If the actual report is greater than the forecast it can be good for trading the EUR/USD, but either way the report makes for a good opportunity to trade Nadex spreads with a Straddle strategy. 

For this strategy, Nadex EUR/USD spreads are traded to straddle the market in preparation for a significant move up or down. A spread is bought with the floor of wherever the market is trading at the time, and a spread is sold with the ceiling where the market is trading at the time. The spread allows the trader to trade a range of a market, with the floor and ceiling being the boundaries. There is no profit or loss beyond the floor or ceiling, and a spread can be traded long or short.

Each spread for this straddle trade needs to have a max risk of $20, for a combined max risk of $40. There is no need for stops to be placed, as the risk is so low. Take profit orders however should be set where the market would hit 80 pips up or down. Below is a chart to get an idea of the breakeven, profit and loss amounts based on market movement.

The trade can be placed as early as 7:00 AM ET for the 3:00 PM ET expirations.