FOMC Report Out Tomorrow 12.16.2015

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Here is some futures market insight from our Senior Broker, Jack Engin of today’s market action:

There is a muffled mix of excitement and tempered anxiety in the air surrounding all of the markets ahead of the FOMC’s all-important announcement tomorrow.

Our Vice President, Ilan Levy-Mayer, has in the past, issued sound and, in my opinion, paramount advice for trading on FOMC days; please heed his warnings below:

FOMC days have different characteristics than other trading days. If you have traded for a while, check your trading notes from past FOMC days that may help you prepare for tomorrow.

if you are a newcomer, take a more conservative approach and make sure you understand that the news can really move the market.

The following are 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 2065.00 with a stop at 2059.00, instead “stretch the price bands” due to volatility and place an entry order to buy at 2059.75 and place a stop a few points below in this hypothetical example.
• 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.
• Know what the market was expecting, learn what came out and observe market reaction for clues

Be patient and be disciplined

Many ways to trade any market, many ways to lose money in any market and only very few ways to lock in gains. If you need help creating a trading plan, visit our broker assist services.  

GOOD TRADING