10:1 Reward Risk

I was checking out HedgeStreet.com a little today to see what they have to offer.  They're self described as the first Internet-based, government regulated
market where traders can hedge against or speculate on economic events
and price movements.  Just like trading Forex, you can buy or sell contracts by placing bids and offers.  The difference is that you trade based on certain events. 

Here is a good example.  Instead of buying the GBP/USD or selling the GBP/USD, you would answer the following question:

At 8:00 pm EST, will the EUR/USD be above 1.3400?

If you think it will, buy 20 contracts at their stated price of 9.00.  If the EUR/USD is above 1.3400 at 8:00 EST, you profit $1820.00.  If it isn't, you lose $180.00 (20 contracts x $9.00).

This is a 10:1 reward/risk, is it not?

Right now the EUR/USD is trading at 1.3235 so it would have to move up 165 pips and then close above 1.3400 after 8:00 pm EST.  We do have the FOMC at 2:15 pm but I think 165 pips is asking a lot.  In addition, just because you put the order in doesn't mean it is going to be filled.  In order for the order to fill, another trader has to take the action the opposite way.  If he takes your action, he stands to make only $180 for a risk of $1800.  

I thought I'd throw this out there.  It's hard enough trading forex by buying or selling at a given price but then also having to predict how much it will move in a predetermined time is even more difficult. 

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