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Trading the FOMC
- Thread starter steve46
- Start date
Hey Folks:
Sorry I have been out today. I have a family member ill, so I will be unable to post regularly for a couple days.
Let me start by replying to Wanderer:
I did not trade the FOMC this time (reason above). You question is a good one and it allows me to talk briefly about a rule that I ALWAYS follow. Here's how it was taught to me.
"Do not trade during periods of personal stress (weddings, funerals, illness, divorce, you decide). The reason....inevitably your judgement is affected, and the longer you stay in, the more certain you will have an unfortunate experience"
I learned this from my own teacher (and "the hard way") and in my experience it has been true.
Look, when I am prepared, when I am feeling good and nothing bad is hanging over me, I feel competent to trade any market environment aggressively. I hope you and other realize, that the point of the thread isn't just how to trade the FOMC, but how to APPROACH any market, even a very volatile one, with confidence because you know how to control risk effectively. This means you could use this approach for earnings reports (equities), for economic reports (CPI, PPI, Beige Book, etc), for Bond, T-Bill or Note Auctions, or ANY market where you might ordinarily pass because you think you might get hurt.
I realize I have to develop the basic ideas a bit, but that is what I would like to do here.
I hope this helps.
Best Regards,
Steve
Sorry I have been out today. I have a family member ill, so I will be unable to post regularly for a couple days.
Let me start by replying to Wanderer:
I did not trade the FOMC this time (reason above). You question is a good one and it allows me to talk briefly about a rule that I ALWAYS follow. Here's how it was taught to me.
"Do not trade during periods of personal stress (weddings, funerals, illness, divorce, you decide). The reason....inevitably your judgement is affected, and the longer you stay in, the more certain you will have an unfortunate experience"
I learned this from my own teacher (and "the hard way") and in my experience it has been true.
Look, when I am prepared, when I am feeling good and nothing bad is hanging over me, I feel competent to trade any market environment aggressively. I hope you and other realize, that the point of the thread isn't just how to trade the FOMC, but how to APPROACH any market, even a very volatile one, with confidence because you know how to control risk effectively. This means you could use this approach for earnings reports (equities), for economic reports (CPI, PPI, Beige Book, etc), for Bond, T-Bill or Note Auctions, or ANY market where you might ordinarily pass because you think you might get hurt.
I realize I have to develop the basic ideas a bit, but that is what I would like to do here.
I hope this helps.
Best Regards,
Steve
Godot:
The way I was taught was to give PRIORITY to trades with the trend.
You may have noticed that I use a channel in my charts. The way I determine trend is to view price on three time frames using the channels to show me trend direction . Daily, 60 min and 5 min. I start with the daily time frame. If It shows me an up trend I move to the 60 min chart looking for any of several setups. If I find a high probability setup (I have pointed out a couple) then I move to the next time frame (5 min candles) and I look for entry.
What I suggest for new traders is try to trade with the trend at first. Then as you develop confidence and a track record, you can start to look for countertrend trades as well. Even then I would put on smaller size for countertrend trades at first, until you prove to yourself that you can make it work. Let your P&L be your guide.
I hope that helps
Sorry to keep you waiting for the answer.
Steve
The way I was taught was to give PRIORITY to trades with the trend.
You may have noticed that I use a channel in my charts. The way I determine trend is to view price on three time frames using the channels to show me trend direction . Daily, 60 min and 5 min. I start with the daily time frame. If It shows me an up trend I move to the 60 min chart looking for any of several setups. If I find a high probability setup (I have pointed out a couple) then I move to the next time frame (5 min candles) and I look for entry.
What I suggest for new traders is try to trade with the trend at first. Then as you develop confidence and a track record, you can start to look for countertrend trades as well. Even then I would put on smaller size for countertrend trades at first, until you prove to yourself that you can make it work. Let your P&L be your guide.
I hope that helps
Sorry to keep you waiting for the answer.
Steve
By the way, I really appreciate the kind comments from you guys. When I was a lot younger, I was fortunate enough to meet a generous guy willing to teach me. It was pure luck. He asked me to pick a time and try to do the same for other folks. I feel good about trying to help folks, especially those who are willing to put some effort in on their own.
For those who have additional questions, please go ahead and post and just be patient. I am likely to get back to my computer in the evenings, and I will try to continue the thread and answer as quickly as I can
I wish you all great success.
Steve
For those who have additional questions, please go ahead and post and just be patient. I am likely to get back to my computer in the evenings, and I will try to continue the thread and answer as quickly as I can
I wish you all great success.
Steve
Godot:
I missed part of your question.
I am attaching a chart of today's Russell
You can see that the uptrend is intact on the 5 min time frame
I will go back and get the chart from the day after the last FOMC announcement (Dec 14, 2005) and post it next.
I missed part of your question.
I am attaching a chart of today's Russell
You can see that the uptrend is intact on the 5 min time frame
I will go back and get the chart from the day after the last FOMC announcement (Dec 14, 2005) and post it next.
Attachments
Okay here is the chart for the day after the most recent FOMC meeting on December 14, 2005. You can see the previous day's
action in the frame as well. Again it seems like the action is essentially a continuation of the same (flat) trend.
What I am pointing out here is that the best way to approach this question is to do research. If you are short on time, you can do what I just did, which is to check back to the point of the most recent "event". As a rule, this will give you a slight edge for the next (current) event.
What I recommend, and I will develop this for you later, is that you learn to mine the data going back a while, enter it in Excel and analyze it in depth IF you have the skills. I will show you (all) how that can be done. It requires some time, but if you have basic math skills you can do it.
I hope this helps.
Steve
action in the frame as well. Again it seems like the action is essentially a continuation of the same (flat) trend.
What I am pointing out here is that the best way to approach this question is to do research. If you are short on time, you can do what I just did, which is to check back to the point of the most recent "event". As a rule, this will give you a slight edge for the next (current) event.
What I recommend, and I will develop this for you later, is that you learn to mine the data going back a while, enter it in Excel and analyze it in depth IF you have the skills. I will show you (all) how that can be done. It requires some time, but if you have basic math skills you can do it.
I hope this helps.
Steve
Attachments
Quote from wanderer:
Relax, i'm a tightwad ; its very difficult to get me to pay.
Besides, I don't think Steve46 is a scammer.
He was directing this to the entire forum here. That being said, who cares if he charges for a pay site or chat room. Isn't that the American way?
No education or a little education is more dangerous and far more costly than investing in a few newsletters, a chat room, or other services. I spend at least 5k a year for information, and it has paid for itself.
I know this is steves thread, but I just want to share two experiences with traders on this issue.
When I first started, I took the Bright one week course which covered opg orders and touched base on a few other ideas. One of the things they were teaching at that time was merger arb. They were pounding the table on the GEHON deal...this is going to get done, put the spread on at 3 bucks and you will make money. Well the spread blew up, the deal didn't get done, and overnight I lost half of my account. A little or no education is very dangerous in this business. I found someone who could teach me a working theory on trading, and made my money back with in 2 months!
Last year, I decided to expand my business. Specifically, I wanted to trade futures. So I looked around, invested in many books, a few newsletters, a few systems, and took two seminars. I took the information, reviewed the systems and strategies to try and completely understand them and then I started trading them the last 5 months of the year. The end result, after a 18 k learning curve, I turned things around and now am up 18k. Around 40% return on the account, and I think that I will make 100k this year trading futures.
What to look for, someone who is passionate, has solid research and actually trades. They don't have to trade size, just be able to actually execute trades and follow the strategies.
Just my opinion, but a qualified one. Now..back to steve!