Two Ways To Capture Profit During Nonfarm Payroll

The markets have been known to make significant moves when the Nonfarm Employment Change is released. This upcoming Friday, December 4, 2015 at 8:30 AM ET, the Bureau of Labor Statistics will be releasing the numbers for the change of employed people in the previous month, excluding the farming industry. There are two great strategies to use to capture profit when the markets move for this event, the Iron Condor and the Straddle.

The markets to focus on for these recommended strategies and profit potential levels are forex markets but trading them using Nadex spreads. It’s easy to open a demo and live account with Nadex. Trading a spread is like trading a designated range of the market and has the advantage of capped risk. You know what your max risk is going into the trade, as spreads have a ceiling and floor. You cannot win or lose past the ceiling or floor based on what direction you traded the spread. Below is a chart showing the markets and various profit potentials for the Iron Condor setups.

To view image click HERE.
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Iron Condor Setup

For an Iron Condor setup, trade two Nadex spreads: a lower spread below the market and an upper spread above the market. You want to buy a lower range spread with its ceiling being where the market is trading at the time, and sell an upper range spread with its floor being where the market is trading at the time. You also need your spreads to have the right profit potential as listed on the chart above. For example, with AUD/USD, each of your spreads should have a profit potential of around $25 or more per spread for a combined profit potential of $50 or more.

To easily find the right spreads with all the above parameters for each of your markets, open the spread scanner at www.apexinvesting.com then login to your Nadex demo or live account. On the scanner just click the market for which you want to see spreads. You can enter as early as 7:00 AM ET for expiration times of 9, 10, or even 3 PM. Next, find spreads with the right ceiling and floor stipulations as mentioned above. Then, check their Risk/Reward columns, the far left if you want to sell the spread and the far right if you want to buy the spread. Once your spreads meet the correct ceiling and floor parameters with the requisite Reward potential, enter both spreads and you have an Iron Condor setup. Below is an image of the spread scanner.

To view image click HERE.
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In the Iron Condor chart, you can also see the 1:1 max risk/reward ratio numbers. Where the market has moved that number of pips up and down, is where you want to place your stops or exit both sides of the trade. The market can move and then pull back, or remain in a range and you can profit. When the trade expires with the market back to center between your spreads is max profit. However, the closer the market is to the center between your spreads, the higher your profit. For every one tick away from the center of your spreads the market is at expiration, it is $1 less in profit.

Straddle Setup

A straddle setup is the exact opposite of an Iron Condor setup. With a straddle, you buy the upper spread with the floor where the market is trading at the time, and you sell the lower spread with the ceiling where the market is trading at the time. Below is the chart for the Straddle set up parameters.

To view image click HERE.
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Again, use the spread scanner located at www.apexinvesting.com to find spreads with the right floor and ceiling parameters. Then, look at the Risk/Reward columns. With straddles, you want to look at the risk and make sure you stay within the maximum risk. For example, setting up a straddle for the AUD/USD, each spread should not have more than $25 risk for a combined max risk of $50. Since the risk is capped and is low with straddles, there is no need for stops. You do however, want to set up take profits at the listed Reward Level above. So, for the AUD/USD, you want to take profit if the market goes up or down 100 pips for a $50 profit.

To wrap this up, you could trade Nonfarm Payroll using both strategies. As the market takes off, you could profit with your Straddle strategy and then when the market pulls back and expires back close between your spreads, your Iron Condor will make some profit. You can enter your trades as early as 7:00 AM ET up to as late as 8:15 AM ET. The report comes out at 8:30 AM ET and 90% of the time, the biggest move happens in the first 15 minutes. As mentioned above, you can use 9, 10 and 3 PM ET expirations. After 11 AM ET, oftentimes the market will remain flat and that can be a good time for butterfly setups using Nadex binaries. To learn more about how to trade the news, find a complete news calendar and strategies to trade the events, go to www.apexinvesting.com. Nadex is a US based CFTC exchange and can be traded from 49 different countries.