Market Overview

Overnight Trading Opportunity Influenced By Six UK Reports


At 4:30 AM EST, Wednesday, January 4, six reports will be released in the UK that can influence trading. Most of them register “low” on the importance scale, but all of them together can present traders with an overnight trading opportunity. The reports are:

  • M4 Money Supply
  • Mortgage Approvals
  • Net Lending to Individuals
  • Services PMI
  • Mortgage Lending
  • Bank of England Consumer Credit

Services PMI receives high importance since purchasing managers have early access to company performance data, which can indicate overall economic performance. Generally, the reports are forecast to remain the same as the previous outcomes, with only minor variances. However, even small fluctuations can cause some movement in the market.

The instrument to utilize is the GBP/USD, which an Iron Condor strategy using Nadex spreads could be beneficial in capturing any volatility. Trader's prefer an Iron Condor strategy when movement is expected, but the direction of the move is unknown. The market can move up down or stay in a range and still have the potential to profit.

With this news being released very early in the morning Eastern Time in the US, a trade can be entered the night before as early as 11:00 PM, with a 7:00 AM expiration. This allows time for movement in the market after the news is released. One Nadex GBP/USD spread is bought below where the market is trading. The ceiling of the bought spread should be where the market is trading. The other spread is sold above where the market is trading. The floor of the sold spread should meet the ceiling of the bought spread and be where the market is trading at the time. Trading a spread means capped risk at the floor and ceiling. There is no losing or profiting past those points, which denote the range of the market being traded long or short.

Additionally, there is no being stopped out at the floor or ceiling. Stops can be placed and for this trade, should be placed around the 1:1 risk reward ratio points.

The trade makes profit when the market pulls back after any reactionary move from the news event, and returns close to where it was at entry. If the market settles anywhere in between the breakeven points from where the market was at entry, profit is made. Max profit occurs when the market returns to where it was at entry, between the two spreads. Apex Investing offers free day trading education.

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.


Related Articles

View Comments and Join the Discussion!

Landec's Earnings Preview

Autos Post Better-Than-Expected December Sales On GDP Growth, Tax Reform