Check Out How To Trade The GDP For Down Under

A primary gauge for most economies is Gross Domestic Product, the products and services produced by a country’s economy. A measure of the change in the inflation-adjusted value of such items in Australia, known as the Australian GDP, will be released Tuesday at 7:30 PM. The percentage, released quarterly, approximately 65 days from the quarter’s end, can cause the AUD/USD market to move and react.

Using an Iron Condor strategy in combination with Nadex AUD/USD spreads can be a profitable trade setup for this news event. The advantage of the spread is limited risk--there is no loss past the floor or the ceiling. There is no profiting past the floor or ceiling either. Spreads have an expiration time as well, for this Iron Condor the entry time is 6:00 PM ET and the expiration time is 11:00 PM ET.

To enter, one could buy a spread with the ceiling where the market is trading at the time, and sell a spread with the floor where the market is trading at the time. Each spread should have a profit potential of $15 or more for a combined profit potential of $30 or more.

The spread offers limited risk with a floor and a ceiling, however stops are still needed to limit risk further and keep it realistic. For any trade ideally a trader should keep risk lower in relation to reward, or at least have a 1:1 risk reward ratio. For this trade setup, those points would be where the market moved up 60 pips or down 60 pips, and that is where stop limit orders should be placed.

Those are the points where the trade would lose more than it’s max potential to profit. The breakeven points for the trade would be where the market hit 30 pips above or 30 pips below. When the market settles anywhere between those breakeven points at expiration, then the trade profits. As long as there are the same number of spreads being bought and sold, more contracts can be traded increasing both risk and profit potential. Typically, this kind of news creates a move in the AUD/USD market and then it tends to pull back, which is the ideal move for this trade strategy.