Market Overview

US New Homes News Generates A Trading Opportunity

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The prospect of building a new home is both exciting and terrifying. Besides being one of the biggest purchases a person makes, there are always decisions to be made about location, landscaping and even colors. All of these factor into the US New Home Sales News Release. Along with the month-over-month New Home Sales report, both reports will be released on Thursday, January 25, at 10:00 AM EST.

Since New Home Sales measures the change in the percentage of the new home sales, it can be a good indicator of the economy. For example, if the number is strong or increasing, that shows an increase in the amount of houses being built, thus an indication of a stronger economy.

The number for both reports is forecast to be lower than last month. However, this does not mean that the news cannot be traded. This type of report usually causes the market to move, but the direction of the move is unknown. Therefore, a strategy such as an Iron Condor utilizing Nadex EUR/USD spreads can be considered a good way of approaching such a news event.

This strategy is capped risk when using CFTC regulated Nadex spreads. One spread is purchased with its ceiling at where the market is trading at the time while another spread is sold with its floor at where the market is trading at the time. If the profit potential desired on one side of the Condor is not attainable, then there is no trade. Be sure not to force trades.

This strategy is one that profits on a market pullback or a ranging market. This is because one spread been bought below market and the other above market, meaning that the trade can profit when the market returns to its center between the spreads. This situation is ideal at settlement as both spreads can then profit. 

To learn more about trading strategies like this one, visit Apex Investing, where all education is free.

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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