The easiest trade of the week

Whenever there's even a possibility of good news from the Fed the US stock indices rally. No need for indicators or technical analysis on this trade, just buy Dow or SP500 stock index futures if you have access or if you don't buy any carry trade currency pair. Use wide stops because there might be a little pullback first after the strong end to last week but you can be sure you'll be in profit before the Fed announces its decision. You can either take profit a few hours before the decision or if you're brave (or a gambler) hold on to it till after the Fed decision.

Doing well so far.

This market has already baked in a 50 basis point cut. Up until early last week, the Fed was hinting at no cut at all. With the Dow slipping under 13K, they finally acquiesced (sp?) and started to hint that they would consider a cut. I expect at most they'll give a 25 basis point cut.

The trade of the week: Short the USD/JPY.

Why? It's a no-brainer. Regardless of what happens, this play will win. If the Fed does as I describe, a 25 point basis cut will leave investors in a foul-mood, because they are expecting 50. This will cause a sell off in the market. The USD/JPY is correlated to the market. So a sell if in the US market equals profit for those short the USD/JPY. Also, any cut (whether 25 or 50) will devalue the dollar, leading to further drops in the USD/JPY. The best part of this trade is the entry price. The USD/JPY has run up quite a bit in the last two weeks. If you're not in this one yet, you could be too late. Regarless of what the Fed decides to do tomorrow, this play wins either way. Mark my words!!

I'm thinking that the market expects 25, so if they cut 50, there will be a HUGE rally.

But, I'm probably biased, since I'm heavy in equities now.

We'll see!

Good luck!

I've seen all kinds of reactions to Fed meeting days. Nothing is ever a sure-thing.

Somebody is right and somebody else is SOL.

The word EASY in the FX world usually equates with an empty account.

I'm not disagreeing with your post just asking for caution.

I don't agree with trading outside of a winning system.

There are times to step outside a system and use your experience and knowledge to place a trade.

I'm not saying necessarily hold the trade into the FOMC statement as I have no idea what that statement will bring but it was fairly predictable that stock index futures and carry trade pairs would rally in the build up to it.

is anyone long on the usdcad?