Trading the FOMC

I was the little canoe in the back lol. I went long the ER2 on the move higher and covered most before it started pulling back. Then began shorting on the move lower and covered after a few minutes. Too bad I trade small contracts compared to the bigger future traders here (still an option man at hear). But wild for 9 minutes there. Looks like the bulls shot their load to soon and had to sell to close and then short real fast given the swing.

I probably only caught the thick meat in the middle but it still tasted good.

Quote from Thunderdog:

Hmm. Looks like a clear case of premature evaluation. Premature evaluators are advised to stay calm, go with the flow and focus on their breathing to make the most of the situation.
:D
More...
 
Okay I am back and wanted to put in a chart of the day's action

Check out the moves and refer to my previous posts regarding the use of LRC and pivots.

Today was pretty neat because you could see price move to test the pivots. Also you can see the false spikes (springs & thrusts) and fakeouts.

Check out how price moved to test the lower LRC and S1 but could not take it out. Option Coach this should be interesting to you as I pointed it out before leaving for my appointment. In general if price cannot "take out" the confluence of two or more lines, it will either stall out there or reverse. In this case it reverse. This is a high probablility trade.

What I am hoping people see here is the following

1. Risk can be managed by preparing and planning
2. Risk can be managed by careful planning of your trade
3. High probability trades can be had if you wait patiently

Depending on your skill set and experience you had two pretty good high probability setups today at points 1 and 3.

Go back and look at how it is done. From getting your background on the FOMC, to analyzing the historical data, to planning a scenario, to waiting for the announcement and trading it. All a matter of prep, and discipline.


Good luck folks
Steve
 

Attachments

VIX increases the day before, increasing the SPY put price even though the underlying SPY itself may increase. Watch the SPY put prices two days before. When the market is calm and the VIX begins to rise, buy some SPY puts and watch their price increase. Sell them before the FOMC announcement at the higher price. If the price has not increased for some reason, you can always close out the trade prior to the announcement.

Direction before FOMC minutes: who the hell knows
Direction after FOMC minutes: who the hell knows
Volatility before FOMC minutes: Almost always increases
Volatility After FOMC minutes: Crazy

Pick the best trade

Some might call this essentially a free arbitrage play, except that there is always some possibility of an early block trade or a random event over a 2 day period so always stick to good money management.
 
How about

Setup position before FOMC , in profit.

Sit and wait risk freeee

Why trade FOMC, when you can minimize risk / maximize original gains and get into position before.
 
there was quite significant short positioning just before the release, u cud have noticed that from the red candle piercing through the previous tall green one and decent size going off on the retracement: although obviously early (mkt took off) that was a tale tell; u cannot see it now on complete chart 'cuz rally took over and made disappear the red candle.
 
Coolweb

That's fine. I suggest you start your own thread where you show traders how to do that.

Here for the moment the subject is "trading the FOMC".

If you have something of value to add, please do.

Thanks

Steve
 
Bitstream:

For those who use Trademaven or similar utilities, you could have dialed in "contracts >100" and volume at price and seen where the smart money was positioning. There are several ways to do this. One is to look for consolidation and refer (again) to a utiltity that shows big money accumulating a position.

Candles show some info as you have pointed out. For me, I like to keep it simple and put a scenario in place that allows me to make a trade with a controlled risk and a defined profit up front.
If you look at the previous posts, you can see that at some point you could anticipate a move that tests one side (pivot, price point or LRC) and then moves to test the other side. Historically this has been the protocol for price action right after the FOMC announcement.

Again I encourage traders to do historical research by reviewing charts of the previous meetings.

Good luck,
Steve
 
Agreed on historical charts research; if u don't have the luxury of a photographic memory or you are new to the game looking back at history is fundamental to anticipate movements during reoccurring events

Steve--I don't have much value to add here; futs are not my game.
 
Quote from coolweb:

How about

Setup position before FOMC , in profit.

Sit and wait risk freeee

Why trade FOMC, when you can minimize risk / maximize original gains and get into position before.
More...


Exactly, where is the chart BEFORE the FOMC announcement? After all, the so called "modified pivot lines" existed from the day before so why not put up the chart with your "see it went to this pivot line" and "notice how it tested that support line" etc. etc?

The ANSWER: You don't know. What is the purpose of this thread if all you are going to do is talk in generalities? I'm not asking you to share your "wisdom" because I don't think you have any to share but you are obviously interested in displaying your vast knowledge in "lecture" mode so why not demonstrate some of it?

Are you going to announce "I'm starting a hedge fund" like when you misrepresented your last hedge fund which turned out to be family members investing with or for you? Is this what this is all about?

Incidentally, how are generic pivot lines or so called "modified pivot lines" an edge when millions go to websites everyday and copy them for all to see and trade off of? Each website always has some sort of explanation about how to use the pivot lines. The guy who came up with the pivot lines, I forget his name but he is the big clearing firm owner for the crude oil traders, even admits they don't work most days in the S&P. He is far too large a trader to apply them to the ER since he trades hundreds of contracts at a time- not one like you. This is not logical. You are not logical.
 
You must log in or register to reply here.
Back
Top