Don't trade FOMC.
I know it's difficult when these events come up and everyone knows there's volatility to be had. Your trades will get wiped.
Let me take you on a journey through the average traders emotions during this period of time (and how to avoid that happening)
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I know it's difficult when these events come up and everyone knows there's volatility to be had. Your trades will get wiped.
Let me take you on a journey through the average traders emotions during this period of time (and how to avoid that happening)
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It starts because you want to position ahead of an event you know will produce a significant move in the market.
You begin to fluctuate between "this looks really bullish I think it'll be positive" and "this news is going to nuke us"
This begins a couple of days prior.
You begin to fluctuate between "this looks really bullish I think it'll be positive" and "this news is going to nuke us"
This begins a couple of days prior.
All of your attention then becomes about positioning for it. You start by trying to take position in the time before and end up getting chopped while your bias continues to flip back and forth.
So you're already losing money, but it's OK because you figure when the move hits it'll be worth it given the impulses we see.
You continue with the same thought process.
You continue with the same thought process.
You read tweets, you read articles, "this dude looks like a great macro analyst and he even spoke about bonds!"
Everything continuing to add to the clusterfuck of information to "assist" you with gambling on the outcome of the event.
Everything continuing to add to the clusterfuck of information to "assist" you with gambling on the outcome of the event.
Then it's time, you've been in and out of multiple positions in the build up, but it's time to pick your poison, long or short.
You remember someone talking about "always fade the first move" - it sounds like a good plan.
You remember someone talking about "always fade the first move" - it sounds like a good plan.
News comes in, BIG green candle, you fade it, remembering the tweet you read.
It continues higher, and higher.
2 days of positioning, thought and being absorbed by information lead to a significantly diminished account balance and missing the move.
It continues higher, and higher.
2 days of positioning, thought and being absorbed by information lead to a significantly diminished account balance and missing the move.
The reality of these events is that the market is designed to absolutely obliterate anybody trying to mess around in them.
We see prices respond very positively in the short-term just to undo everything by the daily close.
We see prices respond very positively in the short-term just to undo everything by the daily close.
We see some whipsaws that happen over 5 minutes.
We see some moves that just continue to melt in a direction that doesn't seem to make sense given the positivity/negativity of the data.
We see some moves that just continue to melt in a direction that doesn't seem to make sense given the positivity/negativity of the data.
Playing into these huge data releases really is an absolute fools game.
You need to understand that if you are playing into them it's because the gambling/addictive side of you is kicking in with the promise of potential riches if you make the correct call.
You need to understand that if you are playing into them it's because the gambling/addictive side of you is kicking in with the promise of potential riches if you make the correct call.
Unfortunately, you won't survive that long. You'll chop beforehand, you'll miss the move, you'll get stopped out from the strength of whipsaws.
I can assure you that anyone trying to position for FOMC typically wishes they'd never bothered.
I can assure you that anyone trying to position for FOMC typically wishes they'd never bothered.
Don't risk your $ on an event that's absolutely impossible to correctly guess/play into.
Let the dust settle after the news and then position for it. It is absolute financial shittery to get involved.
Let the dust settle after the news and then position for it. It is absolute financial shittery to get involved.
Don't convince yourself you know the direction, don't convince yourself you read some tweets and now understand the fed line. It's a way of supporting a gambling addiction.
Some events are truly "sit back and just enjoy the spectacle" FOMC is always one of them.
Some events are truly "sit back and just enjoy the spectacle" FOMC is always one of them.
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