Trading USDCAD CPI Report Using Spreads

Trading USDCAD CPI report using spreads allows traders to limit risk even when going in both directions.  This morning the CPI was expected to come in lower than the previous month but came in higher instead.  The USDCAD fell immediately after the report.

Trading USDCAD CPI Report Using Spreads

The USDCAD had formed a pivot reversal bar to the downside, right at the ATR, on the 60-minute chart, immediately prior to the announcement this morning with hidden divergence on the 240-minute chart to the downside, again right at the ATR.  This created a bias to the downside.   However, immediately after a market report, anything could happen.

USDCAD higher timeframe charts

Instead of doing a directional trade, I opted to do a volatility based trade because, although the report was expected to be lower, it could surprise everyone and come in higher.  The two spreads I entered were:

  • Bought the 1.2930 – 1.3030 spread, incurring $11 of risk per contract
  • Sold the 1.2930 – 1.2830 spread, incurring $21 of risk per contract

While I normally combine the binaries with the spreads, in this case, the spreads provided the lowest risk combination (which is why you need to shop around).

The report was released and the USDCAD fell from 1.2907 to 1.2836.  I exited the spread at 1.2856, capturing $53 of profit per contract.  The net profit after paying the loss on the long spread was $42 (excluding exchange fees).

The chart below shows that trading USDCAD CPI report using spreads allowed a low risk entry trade setup by combining both a long and short position on the USDCAD.

Trading USDCAD CPI Report Using Spreads

About Gail Mercer

Gail Mercer, Founder of TradersHelpDesk, is a highly respected trader, trainer, author, and speaker residing in North Carolina. She has over 15 years of experience in trading and in the development of custom indicators.

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