You can never fully know what to expect out of an FOMC (Federal Open Market Committee) news day but they do have a few somewhat predictable behaviors. In most cases the market doesn't really get a major shock out of these releases as interest rate changes are generally expected well in advance and most things will be priced in, although there could always be some shifts if the language in their statement becomes more dovish or hawkish. As I type this the interest rate decision and statement are still upcoming at 2PM EST but the trading day had some quality opportunities so it's a good place to wrap up in front of the news.
When I mentioned how the FOMC seems to affect market behaviour, what I've noticed is that it's not unusual for the day before the FOMC releases to actually act like a more typical news day (where price moves slowly or ranges as if waiting for release). On the release day itself things actually seem to move quite a bit better and the swings are often larger and smoother. What this means to me is that I typically am a bit cautious the day before the FOMC, in particular about the possibility of trend continuations, but I'm a bit more willing to look for and hold longer runs on the release day itself.
Evaluating My Trading Performance
There's nothing really special about the way I traded today but I'm happy with the outcome. As always, I gauge my performance less on how many points were gained or loss but rather on how well I stuck to my plan and kept emotional control throughout the trading day to make objective decisions. The market was moving well and the swings were good so I just kept things simple and didn't really try to over-think it by fighting the flows.
I followed my plan well and took trades that fit my methodology while managing them objectively, so that's a winning trading day from my perspective no matter what the point total was. I know if I can do that each and every day the my edge will play out in my favor over time so there's not much reason to concern myself with short-term outcomes.
You might notice that I had a couple of "No Fill" situations today where I had wanted to enter a trade but I wasn't able to get my fill at my desired price. This can be a little frustrating particularly when the market takes off in your intended trading direction without you like it did today, but it's a reality of trading sometimes if you are using limit orders to get your price.
Knowing Your Price is an Advantage
I often get asked why I don't just use market orders to enter positions so that I don't miss out but the truth of it is that I don't really want to get in at all unless I can do so at my desired price. Using limit orders this way allows me to have a solidly structured plan which is repeatable with known stops, targets, and management. If using market orders there's the risk of slippage or even just an "itchy" trigger finger that causes you to get into a position too early and in those scenarios it can be much more difficult to keep tight stops.
The other alternative is that I could choose to be even more aggressive with my limit order entries to essentially chase price which would allow me to get into these moves with more certainty. This approach is definitely appealing when looking at today's chart as I probably could have taken another 5 or 6 points but it's also a very dangerous standard to set.
On a day like this with smooth moves things would have worked out nicely if taking more aggressive entries but the market doesn't always operate this way. For every day where the market takes off and doesn't look back there's numerous days where it moves in larger waves and a very aggressive trader would have to suffer a lot of drawdown or a number of losses before price moved in his or her direction.
I ultimately don't really care if I get into every swing or not. All I care about is that I can trade a known edge and follow a structured plan day after day, so that's what I do. I don't concern myself with trying to find a way to capture every point as it's not necessary for consistency or profitability. When I see moves like this that go without me I just think in terms of large sample sizes of similar scenarios where many will go my way and I know that if I keep to my plan that more often than not it will work out in my favor.
A Big Picture Mindset is Key
Having that focus on the bigger picture and larger sample sizes of setups and trades isn't always easy but it's a big part of what I believe separates those who are consistent from those that are not. The novice or inconsistent trader sees every loss as a personal failure and spends considerable time and effort trying to keep it from happening again. That same trader would probably miss a couple trades like this and then either try to adapt their system to catch these next time (which probably won't play out exactly the way it did here resulting in losses) or they will even look to hop to a completely new system that would have taken full advantage of the day. Of course, when a day in the near future plays out poorly they will hop to a new system again and never find a consistent edge. Rinse and repeat.
An experienced trader usually doesn't really care whether they lose a trade, miss a fill, or even have a losing day. It happens. They're not thinking in terms of the outcome of just a few trading scenarios and stressing over the short-term. They are thinking about where their trading edge takes them after dozens or even hundreds of trades. They have confidence in their methodology and know where it will bring them if they simply follow it. When thinking this way, what's the use in getting emotional over a couple setups that didn't quite get filled?
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