Posted By: Ilan Levy-Mayer Vice President, Cannon Trading Futures Blog
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Looks like the FED will raise rates for the first time in few years tomorrow or at least this is the consensus.
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 4325.00 with a stop at 4319.00, instead “stretch the price bands” due to volatility and place an entry order to buy at 4319.75 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!!
Rollover Notice: June
is now the front month for Stock Index futures like ES, MES
, NQ, MNQ
etc. as well as for financials like ZB
and currencies as well, like 6E
ESM22 instead of ESH22.
March stock index futures will settle into cash on Friday morning right around the open.
Also note, Margin increase in several markets.
Volatility is higher and some moves are very violent, have a risk management, trade management in plan, don’t jump in the water with out some sort of a life vest.
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