What To Expect Today in FOMC...
Ok this is the big day for most traders this week. Except it is really not a big day since most of the trading desks around the world fully expect the FED to raise rates.
In light of that what should you expect?
In short, the answer is NOTHING. This means it will likely be extremely volatile wiping out stops both directions and will settle just about where price started.
Read it again and again until it settles in. Would I trade it.
Only if you are going to use small leverage. If you do decide to jump in with both feet you will likely be whip sawed out and will become a casualty versus making a smaller amount. Stocks will move higher of course but not that much.
This event is a no brainer event in that it holds nothing unusual unless the FED surprises to the downside with NO interest rate change. I doubt that will happen with employment numbers and the economy the way it is. However you never know.
In the year of surprises this would sure be a whopper.
There is simply too much data skewed towards an interest rate rise to think that it won't happen. There really is nothing to stop the FED from inching up interest rates which will basically effect NO ONE. This action may have some long term effects but immediate? No.
Just remember to go easy. If you lose make sure it is not something that is going to harm your account. Something you don't care about that will not effect your yearly ROI. I know this is not easy for most traders to do. They get excited for the buildup which is the wrong way to do things anyway and then they end up playing catch up for the rest of the year. Just foolish but that is how a gamblers mentality works.
As for me I am generally going to sit this one out with the exception of some long term trades I have running. I am not worried about being shaken out because I am far enough into them to know that I am relatively safe. Lightening the positions though is something I have already done.
You see that my process is conservative. I have baked into my plan the element of surprise. I have covered every scenario that I think is likely to happen and so there will be no surprises for me even if there is a surprise. For example when the Swiss event happened it caught most traders by surprise because they were skewed highly one way. Evidence over time shows clearly that leverage does nothing at all for your portfolio. In fact you end up the same place as if you had never used it to begin with. So why bother. If the Dollar rockets up this could be an opportunity to fade it or to fade the EURO short but once again it is risky. That's my take folks. I usually am right around these sorts of events so be careful.
In light of that what should you expect?
In short, the answer is NOTHING. This means it will likely be extremely volatile wiping out stops both directions and will settle just about where price started.
Read it again and again until it settles in. Would I trade it.
Only if you are going to use small leverage. If you do decide to jump in with both feet you will likely be whip sawed out and will become a casualty versus making a smaller amount. Stocks will move higher of course but not that much.
This event is a no brainer event in that it holds nothing unusual unless the FED surprises to the downside with NO interest rate change. I doubt that will happen with employment numbers and the economy the way it is. However you never know.
In the year of surprises this would sure be a whopper.
There is simply too much data skewed towards an interest rate rise to think that it won't happen. There really is nothing to stop the FED from inching up interest rates which will basically effect NO ONE. This action may have some long term effects but immediate? No.
Just remember to go easy. If you lose make sure it is not something that is going to harm your account. Something you don't care about that will not effect your yearly ROI. I know this is not easy for most traders to do. They get excited for the buildup which is the wrong way to do things anyway and then they end up playing catch up for the rest of the year. Just foolish but that is how a gamblers mentality works.
As for me I am generally going to sit this one out with the exception of some long term trades I have running. I am not worried about being shaken out because I am far enough into them to know that I am relatively safe. Lightening the positions though is something I have already done.
You see that my process is conservative. I have baked into my plan the element of surprise. I have covered every scenario that I think is likely to happen and so there will be no surprises for me even if there is a surprise. For example when the Swiss event happened it caught most traders by surprise because they were skewed highly one way. Evidence over time shows clearly that leverage does nothing at all for your portfolio. In fact you end up the same place as if you had never used it to begin with. So why bother. If the Dollar rockets up this could be an opportunity to fade it or to fade the EURO short but once again it is risky. That's my take folks. I usually am right around these sorts of events so be careful.
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