Emini Day Trading Lessons: +4.75 Points – Planning Around the FOMC
The excellent start to the week continued today. Although we aren't seeing huge movement in the overall market we are getting excellent price action and some nice swings.
Today's trading was all about being conservative in our targets due to the upcoming FOMC Statement release later in the New York afternoon. What this means to us as traders is that we need to understand how important upcoming news from the FOMC impacts market sentiment in the hours before release so we can plan accordingly.
On days with a big release late in the afternoon it is quite common that we will see a range-bound market and few high momentum moves. This is because many of the major players are unlikely to put on large positions so near to a major release when there is a great deal of uncertainty in the market.
Since the financial crisis in the US the FOMC releases have had a considerable impact on all markets so even the big boys are likely to play it safe.
All of this influenced my thinking today as I managed my trades and as soon as momentum slowed I was banking my points. The odds of home run trades on a day like this are low so it's best to be a bit more conservative in our approach and take only what the market offers easily.
This conservative approach also meant passing on some low probability opportunities that were filtered by our rules. As you can see I tried to take a long after the initial move up at the open but was unable to get filled on the edge. When price rejected our zone here the original trade became invalidated so I removed my order. This turned out to be the right decision as price broke down very strongly soon after.
It's crucial that you have rules and scenarios that allow you to avoid low probability trading opportunities!
With momentum now to the downside I was looking for shorts. As I've mentioned over and over now I was going for a conservative approach, so I attempted to get filled a tick higher to make the trade a bit safer and give me more management room. This trade didn't fill but I was lucky enough to be able to get filled on the pullback a tick lower.
From here we ran into the zone (orange circle) that I had planned out in advance as a potential sticking point for the trade. I did feel strongly that this trade might run straight to the prior low from the pre-NY news release but it wasn't to be. I was trailing very tightly however as I still wanted those two points. The next trade was straight-forward and the only trick was knowing when to get out as price was showing a final stall to the overall move.
After that we saw the shift in market momentum and were presented with a quality long opportunity. The trade looked great to start but then stalled one tick from my target before coming back. I gave it a second chance to make 1503.25 but when that push failed I finally moved my target and just took the 1.5 points as the market was signaling that it wasn't very interested in going any higher. As it turned out this was an excellent decision and I was so pleased with my management here that I think it's fair to say this was my favourite trade of the day!
- Strike While The Iron is Hot - March 1, 2021
- The Path to Becoming a Full Time Trader - February 22, 2021
- Looking to 2021 and Beyond - January 20, 2021
