Dare to trade the FOMC?
Well, I didn’t!! In the past I have done so and have won loads and have lost loads also. If you spreadbet then you find that you can’t get in and out as quick as you like and you can be stuck in a losing position.
Anyway, as mentioned yesterday, we were told by our trading mentor not to trade today unless it’s past 7.30pm (GMT) and that’s only if you really have to and see something. Well, the market has move strongly to the downside and now my indicators are all indicating that the market is oversold. However, for those that have studied indicators, what the indicators say isn’t always what determines what the markets do. If anything, the markets will do the opposite and run your stops before you can even think about it.
Anyway, I was seriously contemplating a short with this market, if you look at the daily chart (top left) you will see that the price action was right at the top end of the channel.. stochastics is also looking high and into overbought territory.
In addition, both the 5 min and 15 mins charts had stochastics in the overbought territory.. surely it was a short?
For those that like a gamble and traded it, you would have made a killing but as I’ve not really done too well trading the FOMC in the past, I think its probably best to leave it for the day! The worst thing to think is to think that if you had traded it you would have made money… the next time you make this analysis you will find that it goes against you and the market takes all your money. I understand the attraction though, the market has almost made 150 prices in about 30 mins!! That’s a massive $1875 on 1 contract!!
However, I need to prove myself and be careful not to lose money after my disaster first day live trading yesterday!
