Be Prepared For Profit Taking When The ECB Holds Its Press Conference This Week

Every six weeks, the European Central Bank gives its regularly scheduled press conference immediately following its meeting on Thursday, January 21, 2016. The press conference can last around one hour. After the press conference, there is the question and answer period where unpredictable pointed questions can be asked and information given. The question and answer period can create market volatility. For this news event, the possible volatility calls for a Straddle trade using Nadex spreads.

Based on previous market reaction to this news event, it was found that the market could move a great deal in response. In a straddle strategy, whichever direction the market takes off, it is prepared to capture profit. For this trade, the recommended maximum risk is $45 combined between the spreads. Buy a Nadex EUR/USD above the market but with the floor where the market is trading at the time and sell a Nadex EUR/USD spread but with the ceiling where the market is trading at the time. With this setup, the market only needs to take off in either direction. To find just the right spreads, you can use the spread scanner available to access free at www.apexinvesting.com. You can see the spread scanner below with a list of EUR/USD spreads.

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Each spread is listed down the middle of the scanner with its floor and ceiling numbers. Then the risk reward is listed to the outside of the scanner, to the left when you sell and to the right when you buy. It’s just that simple for this setup. You will also need to have and be logged into a Nadex demo or live account. However, either account takes just moments to set up. Be sure to demo the trade first before going live.

The news comes out at 8:30 AM ET, so you can enter as early as 8:00 AM ET for a 3 PM ET expiration. Remember, the news will be released and the press conference lasts around an hour, followed by the question and answer period, which is when the volatility can be high. The market tends to take off in a direction. When that happens, one side of your trade can profit and the other will lose. To cover the cost of the losing trade, you exit at the 1:1 risk reward ratio points, which for this trade is 90 pips up or down. When the the market hits at one of those points, you will have profited $45, covered the cost of your spread that profited and covered the spread that lost.

The advantage with this strategy is its low risk. If one side has profited you can still leave the other side on. If the market pulls back, you may profit on that spread as well, or break even depending on how far the market pulls back. Straddle strategies are great for markets that are anticipated to make a big move and ready to take profit whichever direction that market makes its big move.

For a complete calendar of news events and strategies to trade them, you can visit www.apexinvesting.com. There you can find free education on trading Nadex binaries and spreads, as well as futures, forex and CFDs.