Canadian Trade Balance Release Makes For Trade Opportunity

Statistics Canada will be releasing their Trade Balance for Canada on Tuesday, October 6, 2015, at 8:30 AM ET. This can make for a trade opportunity using Nadex USD/CAD spreads. With news trades, the challenging part can be trying to figure out which way the market is going to go. Fortunately, the strategy recommended for this news event can be profitable when the market moves up or down.

The trade balance for a country is significant for a number of reasons. It is the measure of difference in value between imported and exported goods during the reported month. If the number is positive then more goods were imported than exported. Foreigners must pay for the nation’s exports with the nation’s currency; therefore, the foreigners must first purchase the nation’s currency. Domestic manufacturer’s prices are also affected by export demand.

Using Nadex Spreads, Straddle The USD/CAD Market

To trade this report, a Straddle strategy is recommended. A Straddle is just like it suggests- it’s a strategy that straddles the market ready to profit no matter which way the market moves. The trick with a Straddle strategy is to make sure there is enough of a market move to cover your trade cost and make profit.

This Straddle involves trading two Nadex USD/CAD Spreads, an upper spread and a lower spread with the market trading in the middle. Buy an upper spread with the floor where the market is trading at the time and sell a lower spread with the ceiling trading where the market is trading at the time. You can enter your spreads at 8:00 AM ET for 10:00 AM ET expirations. Your maximum risk should be $40. To easily find your spreads you can use the spread scanner. See below image for an example of the spread scanner displaying the Nadex USD/CAD spreads.

You will see the spread contracts listed in the center and the risk reward listed on the far left, if you sell the spread and the far right if you buy the spread. Just look for the spreads with the right floor and ceiling parameters and their combined risk should be no more than $40. If none of the spreads available at the time of entry meets all those conditions then do not place the trade.

After the release of the spreads, you are looking for the market to take off and move around 80 pips in one direction for a 1:1 risk reward ratio. If the market moves 40 pips in one direction, that will be breakeven. Any move less than 40 pips and you will have some loss. However, based on previous market analysis from the last 12 - 24 reports, the market moves around 80 pips on average.

To get access to the spread scanner, go to www.apexinvesting.com a service providing free trade education with tools for trading Nadex, futures, forex and CFDs.