Aussie News Can Mean U.S. Evening Trade Opportunity

Sometimes evening trading can be slow. When trying to trade in the evening, checking out what news is being released can be helpful in finding trade opportunities. Market reaction to the news event can be tracked. When there is consistency in the market movement, this is when the trader has the opportunity to choose a strategy from the bag of strategies to trade the event.

One strategy designed well for news trades is the Iron Condor using Nadex spreads. It’s a neutral strategy, one that profits when the market moves in reaction to the news, and then pulls back after the move. As the market pulls backand the time begins to expire, the trade collects premium on the trade.

Monday at 7:30 p.m. ET, the Australian Building Approvals report will be released. This makes for an evening trade opportunity, and based on previous market reaction to this news, an Iron Condor, with a $30 profit potential or more, can be set up.

One Nadex AUD/USD spread could be bought below the market with a $15 or more profit potential, and one spread could be sold above the market with a $15 or more profit potential. The ceiling of the bought spread should meet the floor of the sold spread, and be where the market is trading at the time.

Below is a chart showing the profit and loss of an Iron Condor, with a $30 combined profit potential, based on where the market would be at settlement in various 15-pip increments.

To view a larger image click HERE.

In the event the market doesn’t pull back, stops should be placed for this trade at 60 pips above and below where the market was at entry. This will keep risk to a realistic $30 or 1:1 risk reward ratio. Maximium profit is when the market is between the two spreads at settlement and the breakeven points are 30 pips above and below. 

For free access to the spread scanner designed to easily trade Nadex spreads, as well as free day trading education, visit Apex Investing.