Market Overview

Trade Opportunity When Canada Releases Interest Rate News

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The Bank of Canada releases the Rate Statement and Overnight Interest Rate on Wednesday at 10:00 AM ET. 

The Straddle strategy is ideal for capturing profit whichever direction the market moves in reaction to the news when it’s expected the market will make a big move. With this news, it is expected the market will move far enough to use the Straddle strategy and go for approximately $40 profit.

Using Nadex USD/CAD spreads to setup the Straddle strategy, one could buy a spread with a maximum risk of $20 and sell a spread with a maximum risk of $20. The floor of the bought spread should meet the ceiling of the sold spread. With the release at 10:00 AM ET, entry can be as early as 9:00 AM ET, for 11:00 AM ET expiration.

The Plan Is For One Side To Profit And Cover The Loss Of The Other Side

When trading a Straddle spread strategy, one side will lose and the other side will profit. Therefore, the expected move for the anticipated profit needs to cover the cost of the trade as well as the loss from the other side. For this trade setup, take profit orders should be setup 80 pips up if the market goes long and 80 pips below if the market goes short. Taking profit at either of those points will cover the loss of the other side and make $40 profit depending on the exact entries and exits.

Once the news is released, one side may profit and then the market may pull back. Leave the other spread on and it may make some profit as well, depending on the strength and momentum of the pull back move.

Posted-In: Binary Options News Education Eurozone Futures Commodities Options Forex

 

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