UK Manufacturing And Industrial Production Make For Nighttime News Trade

Manufacturing and industrial production news is an important reflection on the economy for any country. The UK’s Office for National Statistics will report output numbers for both sectors on Friday at 4:30 a.m. ET. This event makes for a good trading opportunity using an Iron Condor strategy with Nadex GBP/USD spreads. 

Typically, on scheduled news events of this kind, the market will make a reactionary move and then pull back. With the Iron Condor strategy, you can profit on the pull back move.

There are two spreads, one bought below the market, and one sold above the market. The bought spread’s ceiling should meet the sold spread’s floor, and also be where the market is trading at the time of entry. Entry can be as early as the evening before at 11:00 a.m. ET when the 7:00 a.m. ET expiring spreads are released.

The profit potential should be a combined $35 for the trade, or around $17-18 or more for each spread. If the profit potential isn’t there or the ceiling-floor parameters can’t be met, then there is no trade. Trades should never be forced; rather traders need patience to pick the best trades for the highest opportunity to profit.

The goal is for the market to make a move and then pullback to between the two spreads and settle there. When this happens the trade can make it's maximum profit potential. However, if the market takes off and doesn’t make the anticipated pull back, stops should be placed at the 1:1 risk reward ratio points, 70 pips above and below from where the market is at entry.

The market can settle anywhere in between the two breakeven points. The breakeven points are 35 pips up and down from where the market is at entry. That makes for a 70-pip range for the market to settle to make a profit. For every pip away from the center the market is at settlement, it is $1 less in profit. More spreads can always be traded, as long as there is the same number of spreads on each side of the Iron Condor.

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