Evening Trade Tip On Trading Aussie Retail Sales

Australian Retail Sales will be released Thursday, March 3, 2016. Most economic activity comes from consumer spending and Retail Sales tells us how the spending is going. Australian Bureau of Statistics releases the information for Australia monthly and this news can make for a nice trade using Nadex spreads with an Iron Condor strategy.

The release is scheduled for 7:30 PM ET so you can enter at 7:00 PM ET for 9:00 PM ET expirations. Buy a Nadex AUD/USD spread below the market but with the ceiling of the spread where the market is trading at the time. At the same time, sell a Nadex AUD/USD spread above the market but with the floor of the spread where the market is trading at the time. You won’t win or lose past the floor or the ceiling depending on the direction you are trading the spread. The profit potential you are going for is $30 or more. If that seems low, you can always trade more spreads. Just be sure to trade the same number on each side.

Capped Risk With Spreads and Realistic Risk Is Not Max Risk

The risk may seem high as well. Consider however, with a spread your max risk is capped; you can’t lose past the ceiling if you sold or past the floor if you bought. When trading forex, the risk is unlimited. The realistic risk, based on where your stops are with this Iron Condor trade, will be where the market hits 60 pips up or 60 pips down. At those points you need to place stop limit orders to keep your realistic risk to a 1:1 risk/reward ratio. Breakeven points will be where the market hits 30 pips up or down.

Remember you’re buying below the market and selling above the market. To make profit on both spreads, you want the market to either stay right where it is until expiration for max profit, or the market can move high enough for one spread to profit and when the market pulls back, the other side may profit as well. For this to happen, you also need to place stop limit orders for taking profit. As a third option, the market can stay in a range and for every pip away from the center of your two spreads the market is at expiration, it is $1 less in profit.

The advantage to this trade is the wide range the market has for a breakeven zone: 60 pips, and for a 1:1 max risk reward ratio zone: 120 pips. Trade strategies like these are based on analysis of many previous reports and the market’s reaction to them looking for consistencies in the size of moves and kinds of moves.

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