Consumer Spending For U.S.: Big Gauge For Economic Activity

The more you go to the store, any store, or even online to purchase something, the more you contribute to consumer spending which makes up the greater part of economic activity in the U.S.

There are two different reports that tell about consumer spending, the Retail Sales and Core Retail Sales reports. Interestingly, while automobiles are considered a consumer item, the sales numbers for autos is not included in the Core Retail Sales report.

Automobile sales makes up approximately 20% of Retail Sales and is volatile. Therefore, this data is kept from the Core Retail Sales report and this report is considered to be a better measure for spending trends.

Besides understanding Retail Sales, why is any of this important? The reason is, these two reports together with Unemployment Claims come out at 8:30 AM ET, Thursday, August 13, 2015, and make for a trade opportunity.

These kinds of news events can move the EUR/USD market however, not by much and then the market tends to pull back. An Iron Condor strategy, which is what is recommended for this scheduled event, works well for this consistent kind of market reaction.

Always Be Aware Of What News Is Coming Out And Possible Market Reaction

You can trade the news, but even if you’re not trading the news with a recommended strategy, you should always be aware of what news is coming out and which markets are expected to react.

For the Core Retail Sales, it’s forecast it will increase by 0.5% and for Retail Sales the forecast is the same. For Unemployment Claims however, that is forecast to go up a bit at 272k.

For the Retail reports, if the actual comes in more than what was forecast, that’s good for currency while for unemployment claims, it’s better if actual comes in lower than expected. If you do trade a news event with a strategy, be sure you can meet all the parameters in the setup or don’t place the trade.

For an Iron Condor strategy, you trade two Nadex spreads. In this case, you would want to trade Nadex EUR/USD spreads. Spreads have a floor and a ceiling and if you plotted the floor and ceiling of both spreads for an Iron Condor setup on a chart, you would see there is a top or upper spread and a bottom or lower spread. The reason being that the lower spread’s ceiling should meet the upper spread’s floor and be where the market is trading at that time.

You Can Trade More Spreads On Each Side

Since the reports come out at 8:30 AM ET, you would enter your spreads at 8:00 AM ET for 10:00 AM ET expiration. Your profit potential should be $30 or more. The trade can be left on until expiration and that will give it plenty of time to play out.

Based on 12 - 24 months of analysis on market reaction after the event, it was found that the market will move and tend to pull back, which is what you want. The closer to center the market returns, to where it started, the higher your profit.

For each pip away the market is from that center, it is $1 less profit for you. You can always trade more spreads as well. Be sure to have the same number though, on each side of your trade and enter both sides at the same time.

Nadex lists spreads and binaries for trade and can be traded from 49 different countries. Apex Investing keeps a trade calendar weekly with news events and strategies to trade them.

To see the calendar and learn more on how to trade Nadex, futures, forex and CFD’s you can visit www.apexinvesting.com.