Market Overview

US Economic Reports Inbound


On Thursday, January 18, at 8:30 A.M., the Census Bureau, Department of Commerce, Department of Labor, and the Federal Reserve Bank of Philadelphia will release a total of thirteen reports. These reports, which vary from low to high in importance, have the potential to impact trading upon release. The reports cover topics such as housing starts, jobless claims, building permits and the Philadelphia federal index. Such reports measure changes happening in the economy of the United States. There are various ways reports of this kind may affect the market while also offering a trade setup.

In the market, these types of reports are known to cause volatile movements. Reactions to this kind of news is generally followed by a pullback after the movement. However, the direction of this movement is unknown.

One advantageous strategy some traders use in events like this is the Iron Condor, which uses two Nadex GBP/USD spreads. The first spread is bought below the market at the same time the second is sold  above the market. Thus, premium can be collected regardless of how the market moves. At the time of entry, the ceiling of the bought spread should meet the floor of the sold spread while being where the market is trading.

Collecting Trade Premiums

With the Iron Condor strategy, both trades stand to profit relative to the center when the market goes up or down once the pullback occurs. As the time expires, both spreads can profit and provide a premium. Risk can be maintained to keep a realistic 1:1 potential, and there is no risk beyond the floor and ceiling of spreads.

This trade can be entered as early as 8:00 A.M. on Thursday, January 18. The 10:00 A.M. expiring spreads will be available the morning the reports are released, providing a quick opportunity to trade. This is a great trade to familiarize further with the market reactions demonstrated between news events and Nadex spreads.

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

Posted-In: Binary Options


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