Pre-Fed gambling

Quote from Cheese:

Completely wrong.
Nothing to do with gambling.
Entries into upmoves and downmoves are signaled as is exiting, dependant of course on an accurate methodology.
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I'm learning quickly that the market tells the news faster than any reporter can, and that you must just jump in when the direction and velocity of the wave is clear, and jump out before the wave turns its back on you.

Is this gambling? I think exit time is the most difficult part - so the longer you hold on, the more you gamble.

Today was easy money, for about 3 or 4 minutes of watching -- volume and movement told it all.

It could've been bad news and it could've been down instead of up, and the story would've been the same.
 
Quote from smilingsynic:

I don’t always have time to watch how stock futures (er, people trading them) behave before a Fed announcement, but when I do I am always amazed, and at the same time repulsed. Volume almost always picks up, and whipsaws are the norm...

I am more interested in how people react once the news is out. I trade emotion, not prices...

That kind of price action can be gamed and, with discipline, exploited for big money. Any trader worth his or her salt made some money this afternoon.

Nevertheless, those who were actively trading e-minis and other instruments in the minutes before 2:15 today are not traders...
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First of all, FOMC announcement trading can and will often produce strong price reactions as any other key market event day that's shown at the below link.

http://online.wsj.com/public/resources/documents/b-econoday.htm

The main difference is that on FOMC announcement there's much more hype leading into it and more often than not (not always) the price movement is fast paced in comparison to other key market events.

My point is if you fear trading your strategies on FOMC Announcement trading days than you shouldn't be trading any other key market event day.

That would imply you should be only trading just few times per month.

For example, every trading day this week had a key market event.

Now...if your suggesting someone that takes a trade at 2:13pm est is a gambler in comparison to someone that took a trade yesterday (not a gambler)...

Your theory is wrong.

Now...although you weren't specific...you may have been talking about someone trading via the seat of his/her pants (without a trading plan or without a strategy).

If so...that type of trader will have problems regardless if its @ 2:13pm est on FOMC announcement days or any trading day that doesn't have a key market event.

However, I will be specific and say this...

Most traders I know that do have trouble trading on FOMC announcement trading days either do not have a trading plan, have a poor trading plan or are not discipline traders.

Those I know that stick to their trading plan (those that have one) and are discipline...

I rarely see them complaining about FOMC announcement trading days nor about any other trading day that has a key market event.

Once again...being a gambler has absolutely nothing to do with FOMC announcement trading days.

Being a gambler has to do with either trading a method that does not have a positive expectancy or not trading via a method at all.

In addition, I don't understand two of your paragraphs because they seem like a contradiction.

How can someone be worth their salt if they made money this afternoon as you called it and not be consider a gambler by you if they got a pattern signal to go Long at 2:13pm est for example???

Also, a very important question for you...

When is it ok to trade before a key market event...5mins, 15mins, 1hour, 2hrs, 3days, after 3pm est, the following trading day, week after or what???

Here's my answer to the above question.

If you have a solid method with positive expectancy...don't ignore your signals unless you have statistical proof they do not perform well on particular types of trading days when they appear at certain times on those particular trading days.

Further, if you do trade when your stats say you shouldn't be trading...

That's gambling regardless to what day or what time those trades occurred.

Mark
 
I also disagree with Smiling that placing an order before the fed announcement was gambling. Or to be exact, it was not any more of a gambling than placing a trade at any other time. As you said, Smiling, no-one really knows which side the market is going to go, at any time, and more importantly, how far. With proper money management, one has just to exit the trade when he/she is wrong. With a move like today, the reward was very impressive. Now gambling (in the negative sense of it) is to place the trade and remain on the wrong side of it. I also agree with some others that you sound bitter, maybe to have missed the move. It is no reason to bash those who "gambled" and won (big) or lost (a little if they exited in time).
 
Even with a 50 BPS hike, i think the market will still rally. It is future direction and guidance the market needs from the Fed. The economy and the market are in a critical stage, that's why the Fed needs to provide some sort of encouragements in order to keep things afloat. If the Fed scares the market today, the economy may enter a recession, which is something the Fed doesn't like.

Besides, the market has already discounted alot from its all time high in antipication of the worst case scenario. Even if there was bad news today, the market will only go down slightly. There's more upside potential than downside, hence, there's a higher chance of a huge rally.

Anticipate what the Fed will do and bet on high probability situations. Anticipation and high probability coincide to the upside today (for me). So buy!

It's not the same as blind gambling!
 
Quote from NihabaAshi:

First of all, FOMC announcement trading can and will often produce strong price reactions as any other key market event day that's shown at the below link.

http://online.wsj.com/public/resources/documents/b-econoday.htm

The main difference is that on FOMC announcement there's much more hype leading into it and more often than not (not always) the price movement is fast paced in comparison to other key market events.

My point is if you fear trading your strategies on FOMC Announcement trading days than you shouldn't be trading any other key market event day.

That would imply you should be only trading just few times per month.

For example, every trading day this week had a key market event.

Now...if your suggesting someone that takes a trade at 2:13pm est is a gambler in comparison to someone that took a trade yesterday (not a gambler)...

Your theory is wrong.

Now...although you weren't specific...you may have been talking about someone trading via the seat of his/her pants (without a trading plan or without a strategy).

If so...that type of trader will have problems regardless if its @ 2:13pm est on FOMC announcement days or any trading day that doesn't have a key market event.

However, I will be specific and say this...

Most traders I know that do have trouble trading on FOMC announcement trading days either do not have a trading plan, have a poor trading plan or are not discipline traders.

Those I know that stick to their trading plan (those that have one) and are discipline...

I rarely see them complaining about FOMC announcement trading days nor about any other trading day that has a key market event.

Once again...being a gambler has absolutely nothing to do with FOMC announcement trading days.

Being a gambler has to do with either trading a method that does not have a positive expectancy or not trading via a method at all.

In addition, I don't understand two of your paragraphs because they seem like a contradiction.

How can someone be worth their salt if they made money this afternoon as you called it and not be consider a gambler by you if they got a pattern signal to go Long at 2:13pm est for example???

Also, a very important question for you...

When is it ok to trade before a key market event...5mins, 15mins, 1hour, 2hrs, 3days, after 3pm est, the following trading day, week after or what???

Here's my answer to the above question.

If you have a solid method with positive expectancy...don't ignore your signals unless you have statistical proof they do not perform well on particular types of trading days when they appear at certain times on those particular trading days.

Further, if you do trade when your stats say you shouldn't be trading...

That's gambling regardless to what day or what time those trades occurred.

Mark
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Mark , I'm really surprised by your post. Capitalizing on "value" of the news/event by use of one dimensional/directional instrument ? In the environment of shameless spin ? What was it this time , GOOD NEWS=GOOD NEWS or BAD NEWS=GOOD NEWS or maybe vice versa ?
BTW , I did traded FED today and I did made money , but obviously not as directional bet. THAT was the main point of SS post.
 
Quote from IV_Trader:

Mark , I'm really surprised by your post. Capitalizing on "value" of the news/event by use of one dimensional/directional instrument ? In the environment of shameless spin ? What was it this time , GOOD NEWS=GOOD NEWS or BAD NEWS=GOOD NEWS or maybe vice versa ?
BTW , I did traded FED today and I did made money , but obviously not as directional bet. THAT was the main point of SS post.
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Hi IV_Trader

SS had several main points in his post and I only addressed a few.

My main point is to trade your method...if you don't have a method or your method doesn't have a positive expectancy and you trade...

You are gambling.

Further, when gambling...it has absolutely nothing to do with FOMC announcement trading days if such occurs in the few minutes prior to 2:15pm est or any other time.

However, if you have proof your method does not perform well on FOMC announcement trading days or any other key market event trading day...

Stay on the sidelines (you'll only be able to trade a few days per month) or jump in to gamble.

Also, I've been around long enough to know that too many traders will trade FOMC announcement trading days, Fed Beige Book trading days, EIA Petroleum Status Report trading days, Jobless Claims trading days and many other key market event trading days via the seat of their pants because they remember that big move last time and they don't want to miss it this time...

That's also gambling.

Also, I really don't understand what your saying here...

...Capitalizing on "value" of the news/event by use of one dimensional/directional instrument ?

What one dimensional/directional trading instrument are you talking about?

Mark
 
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