A Low Risk Strategy To Trade Both Sides Of A Volatile Market

You can set up for both sides of the market on this news trade. Using a straddle strategy allows for the possibility to capture profit if the market goes up or down. An economic health indicator for the UK will be released by Markit. The Manufacturing PMI is a level of diffusion index based on surveyed purchasing managers from the manufacturing industry. Approximately 600 managers rate business conditions and their opinions are considered in the index. The report is released monthly and will come out again at 4:30 a.m. ET, Tuesday, November 1, 2015. You can place your trade the night before at 11:00 p.m. ET, Monday.

Using Nadex GBP/USD spreads and looking for expirations at 7:00 a.m. ET, you want your straddle to have a maximum risk of $40. Each spread should not exceed around $20 risk. You will be entering two spreads, one for each side of the market, the upside and the downside, to capture potential profit. To do this, you will buy a spread with the floor or bottom of the spread where the market is trading. You also want to sell a spread with the ceiling or top of the spread to be where the market is trading.

To find just the right Nadex GBP/USD spreads, check out the spread scanner on www.apexinvesting.com. Be sure to have a demo or live account with Nadex and be logged into either one at the same time. Below you will see an example of Nadex GBP/USD spreads displayed on the spread scanner.

To view a larger image click HERE.

You can see how the spreads are listed down the center and their respective Risk/Reward columns are on the far left and far right, depending on if you are selling or buying the spread.

This strategy is low risk. Once you put it on you won’t need to worry about stops. You may, however, want to setup limit stop orders for taking profit. For a 1:1 risk reward ratio and make around $40 profit, set your limit order where the market would have moved 80 pips up and or down. Breakeven will be when the market moves around 40 pips up or down. This may seem like a big move to expect from the market. Based on previous analysis on market reaction from past reports, it was found that this kind of volatility to create that kind of move in the market tended to be the case. With risk that is defined and low you can set this trade up and go get some sleep.

To learn more about how to trade the news, strategies to trade the news and how to trade Nadex go to www.apexinvesting.com. Nadex can be traded from 49 different countries and is a US based regulated exchange.