Trade Tip With A Wide 1:1 Risk Reward Range For A Nighttime Trade
Tuesday, September 8, 2015 at 9:30 PM ET, you have a trade opportunity on the AUD/USD.
So right before you’re getting ready to settle in for your night’s sleep, you could make some extra money! The AUD/USD is a great market to trade in the evening hours for the US because that is Australia’s waking business hours.
The reason for the trade is the Australian Bureau of Statistics will be releasing the percentage change in the number of new loans for owner occupied homes. It is a monthly report that comes out around 40 days after the month ends.
The report in July was down by -6.1% and the report in August was up 4.4% but not quite as much as forecast at 5.2%. This is an important indicator for the demand in the housing market and the number of buyers.
For this trade and this set up an Iron Condor strategy could catch profit regardless of the direction the market moves. With this strategy we look for the market to pull back or it can even remain in the general area it started and you will profit.
The reason is that the Iron Condor using Nadex Spreads is a neutral strategy. Based on previous reports over the last 12 - 24 months, the average move of the market involves a pullback after the report.
Enter At 9:00 PM ET For 11:00 PM ET Expirations
The report is released at 9:30 PM ET, therefore you can enter the trade at 9:00 PM ET for 11:00 PM ET expirations. As mentioned, you would be trading the AUD/USD so that’s the chart to follow. However, you want to trade two Nadex AUD/USD Spreads.
Buy a lower spread with its ceiling where the market is trading at the moment and sell an upper spread with the floor where the market is trading at the moment.
With this set up, the ceiling of the bought lower spread and the floor of the sold upper spread meet right where the market is trading at that time. With spreads the risk is defined and capped. You won’t lose past the floor on your bought spread and you won’t lose past the ceiling on your sold spread.
You want your profit potential to be $30 or more for this trade. Your max profit for your bought spread will be at its ceiling and the max profit for your sold spread will be at its floor and that will be right in the center between your spreads.
This is also where the market started at entry. Now you can leave your spread on until expiration if it needs the time to reach that point.
The Iron Condor Wing Span, A Wide Area For The 1:1 Risk Reward Ratio
The great thing about the Iron Condor is its wing span. It allows for the market to move a great deal and still maintain a 1:1 risk reward ratio. For example on this trade, depending on your entry, the market can move 60 pips up or down and not pull back and your trade will have a 1:1 risk reward ratio. That range is 120 pips.
However, remember this recommendation is based on 12 - 24 reports and the market reaction to them. It was found that the best probability for profit was a $30 or more profit potential with an Iron Condor strategy, based on the market pulling back from its move.
For a more in depth look at an Iron Condor trade, see The Awesomeness Of An Iron Condor.
Nadex can be traded from 49 countries and is a US based regulated exchange listing binaries and spreads.
To learn more on how to trade Nadex, futures, forex and CFDs see www.apexinvesting.com.
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