The Trade Strategy For A Market Pullback After News
Various reports are being released for the US on Wednesday, including New Home Sales, Revised Consumer Sentiment and Revised Inflation Expectations. The EUR/USD can be a good market to trade for this event entering at 9:00 a.m. ET for 11:00 a.m. ET expirations based on the reports coming out at 10:00 AM ET. This market tends to make a move and then pull back, which is great for using an Iron Condor strategy.
To trade the EUR/USD market with this strategy, you want to trade Nadex EUR/USD spreads. Buy a lower range spread below the market but with its ceiling being where the market is trading at the time. In addition, sell an upper range spread above the market but with its floor being where the market is trading at the time. The other information you need to know to set up this trade is the profit potential. For this trade, you want your Iron Condor to have a $30 or more combined profit potential.
It’s easy to find Nadex spreads with the right parameters using the spread scanner by Apex Investing. If you are logged into your Nadex demo or live account, which is simple and takes only minutes to open, then you can have the spread scanner display all the available spreads for your chosen markets. See below a display of Nadex EUR/USD spreads.
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The spread scanner will list the spreads down the center showing the floor and ceiling numbers for each spread. Then, to the far left you will see the Risk/Reward column if you sell the spread and to the far right if you buy the spread. Each spread should have approximately $15 or more profit potential. If you want to have more profit potential, then you can simply trade more contracts with the same number on either side.
For a max profit with the Iron Condor strategy, you want the market to either stay where it is or move and pull back to center between your spreads by expiration time. However, for the interim, the Iron Condor provides a wide range for the market to move without a loss. The market can move up or down 60 pips before hitting the 1:1 max risk/reward ratio points, where you need to place stops or exit. The market can move 30 pips up or down and your trade is at breakeven. Fortunately, based on previous market movement after these reports, the market tends to move and then pull back.
To access the spread scanner just go to www.apexinvesting.com. There you will find free education on trading Nadex binaries, spreads and futures, forex and CFDs. Nadex is a CFTC regulated exchange, based in the US and can be traded from 48 different countries.
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