Evening Trade To Catch GBP/USD Moves From News
Certain kinds of news can be traded. If the news is scheduled, the market for trading has consistency in its kind of moves and number of pips moved in reaction to said news, then that is the ideal kind of news for trading. Since it is unknown what the details of the scheduled news will include, and which direction the market reaction will go, an appropriate strategy prepared for either direction is ideal.
Friday, September 30, at 4:30 AM ET, various scheduled news will be released for the UK including:
- Current Account
- Final GDP
- Index of Services
- Revised Business Investment
This news has a consistent impact on the GBP/USD market and with an Iron Condor strategy, may offer a high probability trade. The Iron Condor uses two Nadex GBP/USD spreads. Fortunately, the trade can be placed the night before at 11:00 PM ET for 7:00 AM ET expirations. One spread is bought below the market and one spread is sold above the market. The ceiling of the bought spread should meet the floor of the sold spread and be where the market is trading at the time.
When choosing the spreads, each one should have a profit potential of around $15, for a combined profit potential of $30. This is based on the average move and pullback the market tends to make after the release of this news, going back around 12 releases.
The object of the Iron Condor is to make profit when the market pulls back and settles between the two breakeven points, which for a $30 profit potential is 30 pips up and down from where the market started. Max profit is when the market is between the two spreads at settlement. If $30 seems low, more contracts can be traded as long as there is the same number of spreads on each side. In case the market makes a big move and does not pull back, stop limit orders can be placed 60 pips above and below from where the market was at entry, keeping risk to a 1:1 risk/reward ratio.
For free day trading education and a complete calendar of news events to trade, see Apex Investing.
© 2017 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.