The Weekly Natural Gas Inventory Report Could Be Your Favorite Event

Scheduled news events can be a day trader’s favorite events. The News has the potential to move markets and at specific times for the day trader’s convenience. To make the most from these opportune situations, it’s always good to have a tried and true plan with a strategy. Every Thursday morning at 10:30 AM EST the Natural Gas Inventory Report comes out.

Trading Nadex binaries is a great way to profit from this scheduled weekly news event. If the inventory is higher than expected, then the natural gas market usually drops and if the report is lower than expected, it usually rises in price. With binaries, traders can catch the move in the market. One of the members at Apex Investing Institute posted their strategy in the Apex Forum explaining how they use the Nadex daily binaries, rather than intraday, to make profit from the market’s reaction to the news.

While trying to trade this event, he noticed that there were only three intraday strikes to trade but there were eight daily strikes to trade. Since the few intraday strikes didn't give him many options, he went with the daily strikes. His initial choice of strikes was to identify daily strikes outside, but as close to the outside, of the high and low of the expected range boxes as possible. The expected range indicator draws boxes representing channels of the open to high range and the open to low range, with the outer lines showing an entire actual high to low range of the market hourly. His chart below shows where his initial choices were.

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He had identified the 4.160 strike for a sell and the 3.920 strike for a buy as possible entries for the September 28, 2014 Natural Gas Report. Unfortunately, the market didn’t move far enough to fill either of those legs of the trade. He observed the market moves until 11:00 AM EST or 8:00 AM PST, on his charts as posted here, and then decided to cancel his orders. Then, he decided to add the Magnet Volume price levels and mark where the 4.080 daily strike would be as a point of reference, to observe how the market moves in relation to a usable strike and the Magnet Volume price levels. He then walked away and just let the market play out throughout the day.

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When he returned, the first thing he noticed was the movement of the market down and the deviation indicator indicating the market had made a 1 – 1.5 deviation move. Also, after reviewing the eight possible daily strike entries, the possible ones at 3.960 and 4.000 would have easily filled. With the market having already made a 1 -1.5 deviation move and the strong magnet levels above the strikes, they had high probability of expiring ITM.

In addition, having done back testing previously on this market, he remembered that NG usually likes to retrace or stay flat after the report. He also noticed that there was a channel that is created from the Magnet Volume Price levels. That got him curious wanting to know how often NG expires within that zone or channel or near a defined Magnet Volume Price level. Doing another back test with the below plotted Magnet Price Levels and keeping the channel in mind, he found that out of 18 weeks, for 15 of them, the NG market closed inside or right on a Magnet Volume Price level. That made for an 83% success rate of expiring inside that channel, making the channel useful as an expiration target zone to help identify strikes to buy or sell during the daily movement. He also back tested the strikes that were either bought or sold just outside the 10:00 AM EST / 7:00 AM PST (news report hour) expected ranges. Those strikes expired ITM 16 out of the 18 weeks, an 88% success rate. Whether choosing daily strikes using the channel as a target zone, or choosing daily strikes just outside the channels, both offer a great plan to capture profit on this weekly scheduled news event.

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For a complete monthly calendar of scheduled news events to trade and strategies to trade each one, go to www.apexinvesting.com, a service provided by Darrell Martin. Apex Investing Institute offers free education, and free access to the Nadex Binary and Spread Scanner Analyzers. Member traders are invited to trade in the rooms, take advantage of trade signal services, have key indicators and access the Apex Forum. The forum content is updated daily and includes over 7000 members. In a supportive learning community of seasoned as well as up and coming traders, traders of all levels learn how to trade Nadex binaries and spreads in depth, as well as futures, forex, stock and options, and gain an edge for successful trading overall.