Trade UK Manufacturing PMI Release The Night Before

The UK will release the Manufacturing Purchasing Managers Index on Friday at 4:30 a.m. ET. This report is a result of 600 purchasing managers surveyed about various business conditions, making it a leading indicator of economic health.

Based on previous releases, the GBP/USD can move an average of 40 pips. A Straddle strategy trading Nadex GBP/USD spreads can be a high probability trade. For a Straddle, two spreads are traded.

The upper spread is bought with the floor of where the market is trading at the time, and can profit should the market go long. A lower spread can be sold with the ceiling where the market is trading at the time, and can profit should the market go short. The risk should be no more than $40 combined between the spreads.

For a Straddle, the strategy entails that one side is anticipated to lose. Therefore, the side that profits must cover the loss of the other side. If the max risk is $40, then limit take profit orders should be placed where the market hits 80 pips above and below where it was at entry. Should one take profit be filled, leave the other spread on. The market may pull back far enough to reduce the loss of the leftover spread, or possibly even make some profit.

The nice thing about a Straddle is the low risk. It allows for not having to place stops. This is another reason not to be concerned about taking off the other spread. However, be sure to remove the second limit take profit order once one has been filled.

Entry for this trade is 11:00 p.m. ET the evening before for 7:00 a.m. ET expirations. Based on a max risk of $40, where the market hits 40 pips up or down are the breakeven points for this trade.