US Manufacturing Sector News Ideal For Iron Condor Trade

As reported in the last Manufacturing report by the Institute for Supply Management, the manufacturing sector has had economic expansion for 34 months, and the overall economy grew for the 77th consecutive month. The latest ISM Manufacturing PMI, ISM Manufacturing Prices, and Construction Spending all come out on Tuesday at 10:00 a.m. ET, presenting a trade opportunity for entry at 9:00 a.m. ET, using Nadex EUR/USD spreads.

The ISM Manufacturing Purchasing Manager’s Index report is based on results of surveying around 400 purchasing managers regarding their company’s current business conditions. ISM Manufacturing Prices surveys for price information the manufacturers have been paying for goods and services. Finally, the Construction Spending measures any change in total spending on construction by builders. These reports tend to create a bit of a buildup of implied volatility, which can make for a nice Iron Condor trade for collecting premium.

The Iron Condor strategy uses two Nadex spreads. You can enter as early as 9:00 a.m. ET with an expiration time of 11:00 a.m. ET. For this trade, buy a lower range Nadex EUR/USD spread with the top or ceiling of the range of the spread where the market is trading at the time. Also, sell an upper range Nadex EUR/USD spread with the bottom or floor of the range of the spread where the market is trading at the time. Since spreads have a floor and a ceiling of the spread’s range, you cannot win or lose past the floor or the ceiling depending on which direction you trade the spread.

With this setup, you will notice that the ceiling of your bought lower spread meets the floor of your upper spread and they should be where the market is trading at the time or very close to it. Before buying and selling the spreads, you must make sure the spreads have the right Reward potential amount.

To find all these requirements easily, quickly and at a glance, open the spread scanner at www.apexinvesting.com while logged in to your demo or live Nadex account. Once clicking on EUR/USD, you will then see all the spreads available for that market. Look down the center and find the spreads with the right ceiling and floor then look to the far left and far right. There you will see the Risk/Reward columns. Once both of your chosen spreads each have around $15 Reward potential or more and a combined $30 profit potential or more, you can enter the trade. See the spread scanner in the image below.

To view a larger image click HERE.

This trade profits when the market remains within the wingspan range of your Iron Condor’s breakeven points. For example, the market can move up or down 30 pips and your trade is at breakeven, anywhere in between and you will make some amount of profit. Max profit is when the trade expires and the market is at center between the two spreads right where it was when you entered. For a 1:1 max risk reward ratio point, the market can move up or down 60 pips. At those points, you can set up stop triggers.

To learn more about the Iron Condor strategy and how to trade using the scanner, go to www.apexinvesting.com. There you will find free education on trading Nadex, futures, forex, and CFDs. Nadex is a US based CFTC regulated exchange and can be traded from 49 different countries.