Market Overview

Overnight Straddle Strategy For UK News Release

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The Office for National Statistics in the United Kingdom will release several news reports on Wednesday, February 21, at 4:30 AM EST. These reports include:

  • Average Earnings Index including Bonuses
  • Claimant Count Change
  • Public Sector Net Borrowing
  • Unemployment Rate
  • Average Earnings Excluding Bonuses
  • Public Sector Net Cash Requirement

Most traders in the United States would rather sleep at this time of day. However, knowing these UK news releases can cause volatility in the market, they may want to set an alarm to take advantage of a trading opportunity.

A Straddle strategy is low-risk and ready for the market to move in either direction. The trade can be entered the night before as early as 11:00 PM EST.

The Straddle strategy uses two Nadex GBP/USD spreads. A Spread has a floor and a ceiling, which identifies the range of an underlying market to be traded. One spread is sold with its ceiling where the market is trading at the time, while the other is bought with the floor being where the market is trading at the time. This strategy is opposite of an Iron Condor.

There is no profit or loss past the floor and ceiling, which provides defined capped risk. Since this trade has such low risk, there is no need to set stops.

Traders should place limit orders once the trade has been entered. For a 1:1 max risk/reward ratio, set limit take profit orders where the market would move 80 pips up or 80 pips down. The breakeven points would be where the market hits 40 pips up or down. These reports have previously moved the market. The benefit of this strategy is that if one side profits, the other side still has the chance to profit as well, should the market pull back.

To learn more about news and other trading strategies, visit www.apexinvesting.com.

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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