As traders we need to constantly monitor our trades and manage risk/reward profiles. However, what about managing trades as we approach a market moving news announcement, such as today’s rate decision by the FED.
This basically refers to everything a trader does upon the execution of a trade to maximize profit and minimize loss.
Right now you may be looking at this as a trade by trade analysis, which is fine as each trade needs to be reviewed on it’s own merits. There is also a more black and white portion of this as well though.
Do I want to hold any positions when the FED announcement comes out?
This is a serious question to ask yourself. You can very well get flat before the announcement and then initiate trades based on the reaction of the market.
For day trades this has generally been my practice as I don’t want to deal with the whipsaw that happens that first 5-10 minutes after the announcement. I would rather not drive myself crazy trying to manage multiple positions that are getting tossed around in such a small window. I’d rather watch those initial gyrations and then jump in when the market begins to show its hand.
Now, swing trades are a little different. Being these are trades held for days or even weeks you may want to stick to your initial gameplan. However, trimming positions to book some profits is usually a good idea. Remember, major news announcements can completely change the dynamic of the market and reverse it’s course on the drop of a time.
Putting yourself in the best position to make money is just as important as making good trades. Find out what works for you by making notes of these events and their impact on your trading within your trading journal. The experiences you input there will teach you alot about how you trade and handle different market events.
To learn the most important items to track in your trading journal along with building a complete trading plan check out the Active Trading Blueprint! It’s a complete trading guide, click here: ATB
Remember, “Victory Loves Preparation”