2 Federal Reserve Reports Present Trade Opportunity

Manufacturing information reflecting the health of the economy and the state of inflation will be released Tuesday at 9:15 a.m. ET. Two reports from the Federal Reserve include the US Capacity Utilization Rate and Industrial Production. Capacity Utilization tells of the percentage of available resources being utilized by manufacturers, mines, and utilities. This can indicate what will happen to consumer inflation. As resources get close to being used up, producers often raise prices that can be passed on to consumers. Industrial Production is the change in value of output, adjusted for inflation, produced by manufacturers and is a leading indicator on the health of the economy. Producers react quickly to ups and downs in business cycles and their responses are telling indicators. Hence, these reports can move the market, which then can pull back. A scheduled trade opportunity is then created.

Iron Condor Neutral Trade Strategy Great For News Events

For this kind of market movement, an Iron Condor using Nadex EUR/USD spreads is a good neutral strategy. It’s ready to profit, whichever direction the market moves and with a wide range gives the market plenty of room to move around. It also can profit if the market decides to range and stay close to where it started.

To set up you want to buy a lower range Nadex EUR/USD spread below the market, but with its ceiling being where the market is trading at the time, and also matching up with the floor of the upper range spread you are going to sell. That’s right; also sell an upper range Nadex EUR/USD spread above the market, but with its floor where the market is trading at the time. The profit potential to go for is $30 or more, combined between the spreads. Open the spread scanner to find your ideal spreads available at www.apexinvesting.com. You can enter as early as 8:00 a.m. ET for expiration at 10:00 a.m. ET. Be sure you find spreads with the right parameters and do not enter until you have the right profit potential. If those requirements do not come together for you, then don’t take the trade.

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You can see from the above image the Nadex EUR/USD spreads listed in the spread scanner. To be sure, you have the right profit potential look to the risk/reward columns and be sure the combined reward is $30 or more between the spreads. If you’d like to trade more contracts, you can. Just be sure to keep the same numbers of contracts on both sides of your Iron Condor.

After the news is released, the market will react and it can move up or down approximately 30 pips depending on your entries, before it hits break even. If the market moves past 30 pips in either direction you can start to lose, and around 60 pips in either direction is a 1:1 risk reward ratio, again depending on your exact entries. With that information in mind and depending on your risk tolerance, you can decide where to set up stop limit orders. As the market does move in one direction however, one side of your trade will profit and then as the market pulls back the other side may profit as well. If the market pulls back close to where the market started and right between your spreads and then range there until the spreads expire that can bring a max profit potential. Basically, for every pip away from the center the market is when the spreads expire that will be $1 less in profit, if you hold them until expiration.

For access to the spread scanner go to www.apexinvesting.com where you can find free education on how to trade spreads, binaries, futures, forex and CFDs. Nadex can be traded from 49 different countries and is a US based exchange, regulated by the CFTC.