Consistently Scheduled Financial News Makes For Consistent Trade Opportunities

Financial news targeting different economy specifics is released consistently throughout the year. Some news is released annually, quarterly, monthly, or even weekly. Depending on how influential the news is to other factors of the economy determines how closely traders watch it and how impactful it is on a market. Therefore, trading news releases can be profitable when one has the right market, instrument and expectation of market movement.

UK Manufacturing and Industrial Production numbers was be released Wednesday, June 8, at 4:30 AM ET. The GBP/USD tends to react to this news and on average, can move around 35 pips up or down. Since it is unknown which direction the market will go in response to this release, a strategy prepared to possibly profit for either direction is necessary. Fortunately, such strategies exist.

For this kind of a move, an Iron Condor strategy is ideal trading Nadex spreads. Nadex lists options for day traders, specifically spreads and binary options. The spread designates a range of a market that can be traded in either direction, long or short. It has a floor and a ceiling and there is no losing or profiting past those points. It is unlike a binary, in that it is not all or nothing at settlement.

Fortunately, for this trade, entry is at 11:00 PM ET the night before on Tuesday and not in the middle of the night. Expiration is 7:00 AM ET. A lower range Nadex GBP/USD spread should be bought, with approximately $17 or more profit potential and with the ceiling where the market is trading at the time. An upper range Nadex GBP/USD spread should be sold with approximately $17 or more profit potential, and with the floor being where the market is trading at the time. This setup ensures the ceiling of the bought spread meets the floor of the sold spread, and is where the market is trading at the time.

The spread scanner has columns showing the risk/reward potential for selling and buying each spread. The spreads can easily be found by locating the 7:00 AM ET expiration GBP/USD spreads with around $17 reward potential or more. Then, the ceiling and floor parameters need only be verified. For a quick glance at the layout of the spread scanner, see below.

With the Iron Condor strategy, a spread was bought below market and sold above market. Therefore, the trader wants the market to settle right in the middle of the two spreads for max profit. Stops do need to be entered in case the market takes off in a direction and doesn’t make a pull back. Ideally, trades should have a 1:1 risk reward ratio. A quick way to determine where to put your stops with an Iron Condor strategy is to double the profit potential then place the stops that many pips above and below from where the market was at entry. For this trade, since the total profit potential was $35 combined between the spreads, then the stops should be placed 70 pips above and below.