US Pending Home Sales Comes Out Making For A Potential EUR/USD News Trade

Pending Home Sales is a report that gives forward-looking statistics more forward-looking than does perhaps Existing Home Sales. A home goes pending once a contract is signed but will not actually close for some time. The National Association of Realtors will release US Pending Home Sales Thursday, October 29, 2015 at 10:00 AM ET making for a trade opportunity at 9:00 AM ET using Nadex EUR/USD spreads.

With this kind of news event, an Iron Condor strategy works quite well. You don’t know which way the market is going to go, however based on previous moves the market will react and tends to pull back or it may just range. The Iron Condor can profit if the market stays flat, ranges or moves and pulls back.

This trade uses two Nadex EUR/USD spreads to create the wings of the Iron Condor. You can enter as early as 9:00 AM ET for 11:00 AM ET expirations. You want to buy a lower spread below the market but with the ceiling being where the EUR/USD market is trading at the time. You also want to sell an upper spread above the market but with the floor being where the EUR/USD market is trading at the time. You can see the ceiling of the bought spread and the floor of the sold spread meet where the market is trading.

The profit potential you are looking for in this trade setup is $25 or more. You can trade more spreads if you want, but be sure to trade the same number of spreads on both sides of your Iron Condor. Open the spread scanner to find your ideal spreads. Below you will see an example of the spread scanner with the spread contracts down the center and the risk/reward listed to the outside on the far left for the sells and far right for the buys. There you can find which spreads have a combined reward or profit potential of $25 or more.

To view image click HERE
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With this trade setup, the market can move 50 pips in either direction and the trade will be at a 1:1 risk reward ratio, depending on your exact entry. Your breakeven point is when the market moves 25 pips in either direction, again depending on your exact entry. After the news is announced, as the market tends to react one side may profit and as the market pulls back, the other side may then profit. Therefore, you may end up legging out of the trade, which is taking profit on one side and then a little later the other side. In addition, if the market ranges and stays close to center between the spreads as time goes and the spreads expire, that will bring you max profit.

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