Big day tomorrow! More than a few reports including crude oil numbers and most important, FOMC – Fed decision.
Looks like the FED will raise rates between 50-75 basis points. currently 75% for 0.75 hike)
Countdown to FOMC: CME Fed Watch Tool (cmegroup.com)
The exact figure?
How many fed governors voted? language? future projections?
All these factors will be KEY.
The following are my PERSONAL suggestions on trading during FOMC days:
· Reduce trading size
· Be extra picky = no trade is better than a bad trade
· Choose entry points wisely. Look at longer time frame support and resistance for entry. Take the approach of entering at points where you normally would have placed protective stops. Example, trader x looking to go long the mini SP at 3725.00 with a stop at 3719.00, instead “stretch the price bands” due to volatility and place an entry order to buy at 3719.75 and place a stop a few points below in this hypothetical example ( consider current volatility along with support and resistance levels).
· Expect the higher volatility during and right after the announcement
· Expect to see some “vacuum” ( low volume, big zigzags) right before the number.
· Consider using automated stops and limits attached to your entry order as the market can move very fast at times.
· Keep in mind statement comes out at 1 Pm Central time, the news conference which dissects the language comes out 30 minutes later so the volatility window stretches out.
· Know what the market was expecting, learn what came out and observe market reaction for clues
· Be patient and be disciplined
· If in doubt, stay out!!
As always, plan your trade and trade your plan. Please contact your broker or Cannon Trading with any questions.
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09-21-2022
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