Day trading the FOMC announcement is a coin flip. Not great odds.
My plan for trading stocks today was clear in this morning’s game plan. I don’t trade stocks on FOMC day.
After years of getting my head beat in chasing random volatility I decided to stay away. Gone to play golf. I want an edge on every trade and so should you.
Your goal is to accept risk in exchange for the potential reward. To elevate to great trader status, you need to have a method, system, structure, plan, whatever you prefer to call it. It doesn’t matter the name but what matters is you clearly have an edge. You clearly have a solid probability in place.
Let’s define that probability: The odds of your profit target being reached are better than the odds of your stop loss being reached.
Now look at the chart of the SPY below. Does that look like good odds?
To become a great trader, the journey starts with being a smart trader.
Jesse Livermore had a volatile career, but he had definite trading rules. So should you. The more clear the rules, the more consistent your trading will be.
Pick the right battles before you accept risk.
Stock Trading Recap Video September 17 2015
End of Day S&P 500 Map 9.17.15
An Ode to Trading the FOMC Announcement
Traders love volatility…
It’s how we make money. Or is it?
To be a profitable day trader we need a stocks direction to be obvious, but we don’t need crazy swings. It’s one of the most misunderstood aspects of trading. Sure it’s exciting to watch. There will be plenty of rookies day trading FOMC volatility this afternoon and they will be guessing. And they will lose money.
They will lose money because they don’t have an edge. They will buy the spike higher and watch it trade lower. They will short the second move lower and watch it spike higher.
Once this nonsense is over, then you can jump in with conviction. If the trend into the close, let’s say from 2:45-4pm is clear, you then have the odds with you for a nice trend day tomorrow in the same direction.
Let those who trade for action and excitement do their thing so they have a war story to tell at Bobby Vans.
Me? I will let the dust settle and then hop on board. I get enough excitement watching the Mets.
SPY End of Day Chart 9.17.15
