An Iron Condor Setup To Trade Friday's News

Friday morning 8:30 a.m. ET, four reports will be released regarding sales and pricing data for the U.S. Retail Sales and Core Retail Sales are expected to be up 0.6 percent and 0.4 percent respectively, although September saw both down slightly at -0.3 percent and -0.1 percent respectively. The Producer Price Index could go up 0.2% and the Core Producer Price Index is expected to increase only 0.1%.

The collection of releases can be traded using Nadex spreads with the right strategy. The market typically will react to this news and then pull back. To profit from this kind of a move, an Iron Condor makes for a high probability trade. Trading two Nadex EUR/USD spreads, one bought below the market and one sold above the market, the strategy is set to make profit from both spreads should the market pull back to near or where it started.

The ceiling of the bought spread should meet the floor of the sold spread and be where the market is trading at the time of entry. Enter as early as 7:00 a.m. ET for 9:00 a.m. ET expirations. The typical market move for these reports is around 35 pips based on past reactions to this news. The combined profit potential for this Iron Condor should be $35 or more, which allots for around $17 or more each spread.

The easiest way to set up this trade is to use the intuitive spread scanner designed for accurate, expedient trade execution, especially when setting up strategies using spreads. Using the filter, narrow down the spread choices to the EUR/USD spreads, with 9:00 a.m. expirations. Then, looking down the risk reward columns, find the needed profit potential for each spread on the sell side and buy side. Open tickets for each side and verify the floor, ceiling parameters, and max reward potential. The image below provides a visual of the layout.

To view a larger image click HERE.

The stop trigger function can be used for setting stops. Stops should be placed in the event the market takes off past the 1:1 risk reward ratio points. At those points is where the stops should be placed, which for this trade is 70 pips up and down. The breakeven points are 35 pips up and down and therefore, when the market settles between those two points, the trade will profit some. Max profit occurs when the market is between the two spreads at settlement.

Free access to the spread scanner is available to all traders at Apex Investing along with a complete calendar of news events for trading, and free day-trading education.