Well, I hope a lot of you did the AUD GDP and AUD Retail Sales trades this week.  They were both great Straddle trades and we profited handsomely from them.  Row 2 on the Retail Sales trade hit our Oracle Trader triggers as well and we also did very well from that, though the OT data was a bit later than the spike.

Tomorrow we have some good opportunities.  There are 4 trades; a couple good, one great, and like last week a cool down trade to help us recover from a potentially wild morning.

4:28 AM EST

GBP Services PMI -Level of a diffusion index based on surveyed purchasing managers in the services industry.

GBP/USD

Note:  This data will be released at 4:28 AM, not 4:30.  The Oracle Trader might not get the data for a minute or two after the spike.  It is released to one data provider well before all the rest.  This means that typically we will see movement in one direction, and then when the data shows up in the OT (the rest of the world gets it), we see a continued move in that direction.

I started doing this trade recently but a friend has been doing it for quite some time and doing well with it.  Last month it came out at .6, moved far enough to take the Straddle trade in and get it up about 8 pips or so, retraced back to 0 (taking the Straddle trade out), then moved 50 pips in the original direction over the next 10 minutes or so.  I will NOT trade the OT but will set it up and put triggers of 2 and 2.5 in it.  The purpose of the OT is to let you know what the deviation actually is and when the rest of the world knows that.  The move will have already started by then.  Trade the Straddle with a maxspread of 6 on the GBP/USD.  If one of the Straddle trades does not go live within a second or so after 4:28:00, get rid of them both by Removing the Straddle.  If it does go live and you are up 10 or 15 pips, it will not likely retrace all the way back before the visible data comes out and you will likely get an additional push in the correct direction.  Last month we did not get enough of a spike to keep us from getting caught by the retracement but this was because it turned out the deviation was only .6.  If you barely get in but aren’t up at least 10 pips, you can assume that the data will not have a big deviation.  Hope this makes sense to everyone.  I would trade 1/2 the normal Straddle lots on this.

7:00 AM EST

CAD Employment Change – Change in the number of employed people the previous month.

USD/CAD

This has traditionally been a swing-for-the-fences trade.  Even though there are 2 rows of data with this trade, they almost always come out at exactly the same time.  Their estimates have gotten better on this trade recently, unfortunately, probably because of the depressed economy.  A quick look back tells us this.  In September it came out at 5.8 and .1 (the .1 was in conflict with the 5.8).  It spiked 39 pips in the row 1 direction, then did a bit of retracing.  In October we got  a -16.6 and 0 deviation, with a spike of 35 pips.  This retraced over time most of the way back after the initial spike.  In November it came out at -12 and -.1 (row 2 was in opposition again).  The spike was 24 pips but it whipsawed. Glad not to have been in.  The expected value for this is 17.9k jobs.  I will use triggers of 18 medium and 23 safe on row 1 (up from 15 and 20 in the past) and .2 medium and .3 safe on row 2.  I think if we get a deviation above 17.9, we will have a good move.  We are of course looking for both rows to come out in agreement.  One issue I have noticed lately is that the spread on the USD/CAD frequently grows to 10.  If you choose to set your maxspread to 10 on the Straddle, lower your lots.  If we get a huge deviation (greater than 25 on row 1 and/or greater than .2 on row 2), we will get a 50+ pip spike and the 10 pip spread will be irrelevant, but this has not been happening lately so there is additional risk.  I would trade 1/2 lots on the medium and full lots on the safe.  I will probably set my maxspread to 10 on the Straddle but trade smaller than usual.

8:30 AM EST

US Non-Farm Payroll – Change in the number of employed people during the previous month, excluding farming.

EUR/JPY or USD/JPY

This is a trade that can make or lose a bundle and tends to be really volatile.  Research shows us: In September it came out at -51 and 0, with a 40 pip spike and moves of 125+ pips over 30 minutes.  Wow great trade!  In October it came out at -90 and .1 (row 2 in opposition).  It spiked 15 pips, retraced hard on the row 2 data, and whipsawed all over the place for awhile.  Wow terrible trade!  In November it came out at 91 and 0, with a spike of 26 pips, full retracement, and then continued movement in the right direction.  Wow uneventful trade!  This thing is all over the place, and prone to revisions that can come out at any time after the data is released.  I am beginning to think after looking at this that we are better off trading row 2 only, and using .2 medium and .3 safe for triggers on the Oracle Trader.  The thinking is that if we get a .2 or .3 on row 2, we should get a big enough push in our direction that we will have time to exit the trade in the event row 1 comes out in the opposite direction, regardless of which row comes out first.  Never tried this strategy on this one before but this is what I will do tomorrow on this trade.  We have had huge deviations on row 1 lately with minimal moves.  A 90+ deviation on row 1 should cause a 100 pip spike, but it doesn’t any more.  I will trade 1/4 my normal lots.  I would avoid the Straddle on this because it gets too volatile and you are too likely to be taken in before the news comes out.  If you insist on trying it, trade the USD/JPY with a maxspread of 6 and trade very conservatively.  Might want to set your sellpips and buypips to 8 just to reduce the likelihood you will be taken early.

10:00 AM EST

US ISM Non-Manufacturing – Level of a diffusion index based on surveyed purchasing managers, excluding the manufacturing industry.

USD/JPY

I would only do the Straddle on this.  Set the Oracle Trader with a safe trigger of 3 but don’t point it at anything.  Set the maxspread to 4.  Trade very sparingly.  When you see the data come out, if you are not in, Remove the Straddle and get rid of your pending orders fast.  Did I mention to trade very sparingly?

Good luck.  It promises to be a wild day.