A Straddle For GBP/USD On UK Manufacturing PMI News

Certain financial news events regarding the economy can create more movement in a market than others. Trade strategies can be implemented for scheduled news events like this, especially in markets that move and react with some consistency. 

Take, for example, the UK Manufacturing PMI News, which came out August 1st at 4:30 a.m. ET. This news release typically moves the GBP/USD, and creating an opportunity to use Nadex GBP/USD spreads with a Straddle strategy. A Straddle strategy is one that can be used if the market moves up or down. It is a low risk strategy that does not require stops. A spread is a specific price range of a market that can be traded long or short without loss or profit beyond the floor and ceiling. The market can move past the floor or ceiling and you will not be knocked out of the trade, unless you exit or the spread expires.

The UK Manufacturing PMI trade could have been entered as early as Sunday evening at 11:30 p.m. ET for Monday's 7:00 a.m. ET expiration. A straddle set up would entail a trader buy a spread with the floor where the market is trading at the time of entry, and sell a spread with the ceiling where the market is trading at the time of entry. Each spread should have an approximate max risk of $20 for a combined max risk of $40.

Traders can also use the spread scanner when trading Nadex to find the right spreads for trading at a glance. 

When To Exit
When the market makes its move, the market will go toward one spread’s breakeven and, hopefully, on towards porfit. As one Spread hits breakeven and profits, the other spread will lose. The loss of the other spread must be taken into account when setting up take profit orders. For a 1:1 risk/reward ratio on a Straddle with a max risk of $40, take profit orders should be set where the market will be at 80 pips above and below from where it was at entry.
Free trading education and use of the spread scanner are available at Apex Investing.