Market Overview

Canada GDP Reports Set To Release Friday


On Friday, March 2, at 8:30 AM, Statistics Canada will release four reports. The reports will range in importance from low to high and offer a way to monitor variances in Canada’s economy. They will address annualized GDP, quarter-to-quarter GDP implicit price, and GDP from month-to-month and quarter-to-quarter. As a result, a trade opportunity may arise as these changes occur.

Movements in the market are known to be volatile when news reports of this type are released. A usual reaction to these news reports is movement followed by a pullback to the initial price. However, the direction of these movements is unknown until they happen.

As the market moves, traders who put in orders prior to the release have the chance to collect premium regardless of the movement. One strategy the trader may use to achieve this is known as the Iron Condor. It uses two USD/CAD spreads with the ceiling of a purchased spread meeting the floor of a sold spread when entered where the market is trading at the time.

Premium Collection

Both trades can profit depending on their relation to the center while the market fluctuates once the pullback happens with the Iron Condor strategy. This ultimately results in a premium that the trader can collect if and when the market returns to its level. In this set up, the risk to traders is limited beyond the floor and ceiling of spreads, maintaining risk to a realistic 1:1 potential.

Traders can do this by entering two contracts at the same time, buying one below and selling one above where the market is trading at present. Since a spread limits risk by having a floor and a ceiling, its important to ensure that the floor of the spread sold meets the ceiling of the spread bought. By doing this, the trade is able to profit in a larger range as the market moves.

this is a great trade for demonstrating the way markets react and further familiarizing with news reports and Nadex spread interactions. Traders can use this strategy live once they have become familiar and understand such a demonstration.

Free education for day trading is offered at Apex Investing.

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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