Binaries might be a good way to profit from news on NADEX too. My initial thought was to stick with spreads. But, the binaries may have some merit as well.
I've been following the upcoming news releases using the forex calendar on forexfactory.com and forexpeacearmy.com. Looking at news to be released for this evening, I saw a high impact news release out of Australia. There was also a medium-impact release out of Japan. My strategy on news trading depends (or so I thought) on high-impact news. But, I did watch what happened when that medium-impact Japan news (retail sales, year-over-year) came out and I got inspired by this chart:
That news out of Japan came out at 10mins to the hour. At 15 mins to the hour, there was a contract below the current level of USD/JPY that could have been shorted around $90. I don't remember too well how much the out-of-the-money contract could be bought for, but, I believe it was in the $10/$15 range. That's because of the very short time remaining. Yet, for either of the contracts to finish in-the-money a small move of just a few pips was needed. Ordinarily that few pips would be very unlikely given the short time remaining. But, we had a news event coming. As indicated on the chart, USD/JPY did move and that $90 contract went to $0. That was a nice reminder to watch out for medium-impact news that comes out with 15 minutes or less to go.
Inspired by that, I did some research on the AUD/USD news. The report (Private Expenditure) has caused big moves in the past. So, I decided to try the binary approach on it. I guess a spread could have worked too, but, I wanted to give the binaries a try with this method. I took both sides as shown here:
Netted about $410 on risk of $480 for 85 percent or so return. I didn't balance out the number of contracts I had on either side because of miscalculating how much money I was spending on the first side I took. I should have taken less than 18 contracts on the one side so that I could have bought more than 12 on the other side. I really should have had the same number of contracts on both sides, I think.
Anyway, it looks like you can make money on both spreads and binaries when you trade news.
I am going to keep monitoring the news events. I really don't want to get into any trades unless the particular report has a good history of causing bigger moves. The forex calendar on forexpeacearmy.com is really handy for doing research.
One other thing, I chose to trade USD/JPY based on how much the contracts were trading at. A more direct trade on Australian data is obviously AUD/USD however, looking at the history of the report's effects on various currencies, I saw that USD/JPY was a viable option as well. In the end, AUD/USD may have been a better trade particularly had I been interested in spreads since I think it moved about 25 pips or so.