FOMC tomorrow, should we try to trade the market?? | Forex Factory

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FOMC tomorrow, should we try to trade the market??

  • #1
  • First Post: May 9, 2006 4:05pm May 9, 2006 4:05pm
Hello everyone,

For the pro's who know this, what is the best way to play the news from the FOMC meeting tomorrow? Most are anticipating a raise of .25%, so be it...
But if the comments are he will put a hold on the raising of rates, will we see the EURUSD go short??? Will the dollar stregthen??

Should we put a BUY and SELL STOP say 25 PIPS outside the current levels a few minutes before the announcement??

Please give some scenarios please!!!

thanks
"We are the superior beings, we obey no one!"
  • #2
  • May 9, 2006 4:29pm May 9, 2006 4:29pm
It is all about interpretation, what you interpret might be different from what every one else interprets, plus the big players get the news before it is brodcasted on.. The reason Y u see the market move much before u get to know about the news.
  • #3
  • May 9, 2006 4:33pm May 9, 2006 4:33pm
srry . I dint reply to ur question, if the fomc says that it is done tightening you will actually see a dollar sell-off. so I gues Buy Eur/usd.

I have been following the reports for a long time now, frankly I dont know how the markets move much before the news is on the wires or is brodcasted.

I would be cool if someone know something about this and could help us all.
  • #4
  • May 9, 2006 4:35pm May 9, 2006 4:35pm
You need to be careful when trying to anticipate reaction of this magnitude.

Setting up buys and sells with 25 pip stops has been tried in the past often resulting in a 50+ loss as there is typically slippage during these reports.

I had a friend who personally lost a large sum trying to do just that with 8 lots each side. It spiked in reaction and then immediately spiked the other way triggering both stops. Yet he was convinced it would work flawlessly.

Often during the night the pairs will move in anticipation of the release as well and there is often some $$ to be made there prior to the release.

The best advice I can offer is to wait 5-15 minutes after the relase and follow the reaction trend. Anticipating the reaction when the fundamentals have been building for three weeks is an amatuers game and not a wise one.
Capital Preservation is key to long term wealth accumulation
  • #5
  • May 9, 2006 4:39pm May 9, 2006 4:39pm
Quoting MuddBuddha
You need to be careful when trying to anticipate reaction of this magnitude.

Setting up buys and sells with 25 pip stops has been tried in the past often resulting in a 50+ loss as there is typically slippage during these reports.

I had a friend who personally lost a large sum trying to do just that with 8 lots each side. It spiked in reaction and then immediately spiked the other way triggering both stops. Yet he was convinced it would work flawlessly.

Often during the night the pairs will move in anticipation of the release as well and there is often some $$ to be made there prior to the release.

The best advice I can offer is to wait 5-15 minutes after the relase and follow the reaction trend. Anticipating the reaction when the fundamentals have been building for three weeks is an amatuers game and not a wise one.
Mudd,

thanks for the info.....will wait the 5-15 mins before jumping in
"We are the superior beings, we obey no one!"
  • #6
  • May 9, 2006 4:50pm May 9, 2006 4:50pm
I agree there is a lot of slippage as the announcement hits the wires. If I were to hold a position hours before the announcement, happen to be in the money by 20 pips and decide to move my stops to b/e, will this stop be honored at announcement time should there be whipsaw action? Does anyone have experience doing it this way?

dice
  • #7
  • May 9, 2006 4:51pm May 9, 2006 4:51pm
I agree with you the after the event trade from a breakout is the safest trade... Scott



Quoting MuddBuddha
You need to be careful when trying to anticipate reaction of this magnitude.

Setting up buys and sells with 25 pip stops has been tried in the past often resulting in a 50+ loss as there is typically slippage during these reports.

I had a friend who personally lost a large sum trying to do just that with 8 lots each side. It spiked in reaction and then immediately spiked the other way triggering both stops. Yet he was convinced it would work flawlessly.

Often during the night the pairs will move in anticipation of the release as well and there is often some $$ to be made there prior to the release.

The best advice I can offer is to wait 5-15 minutes after the relase and follow the reaction trend. Anticipating the reaction when the fundamentals have been building for three weeks is an amatuers game and not a wise one.
  • #8
  • May 9, 2006 5:25pm May 9, 2006 5:25pm
If you know what you are doing. Go for it. I have personally made huge profits using the stop-loss system as described during both nfp release and previous fomc releases. My broker has so far filled in the stop-loss


one strategy I use is just before the report is released I will go long on eur/usd and short on gbp/usd placing stop loss and both. on the movement I do exit out of my position and enter to take advantage of the stop-loss rally thereby effectively making up for for the loss on the other pair.

This has worked SO FAR for me.
  • #9
  • May 9, 2006 5:36pm May 9, 2006 5:36pm
i dont know which way the market is going to go, but one thing is clear. the market is anticipating a 25bp raise, AND, more importantly, language in the statement that signals a pause. the only doubt that has been brought to this second part is the comments bernanke made to maria bartaroma last week. but judging from the market's behavior lately, i think there is high anticipation for pause language.

with that said, if the statement language does NOT indicate a pause, you are going to see the dollar shoot through the friggin roof!
Relax and be happy.
  • #10
  • May 9, 2006 5:38pm May 9, 2006 5:38pm
Merlin, was Maria wearing pearls? I heard that is an indicator... Scott



Quoting merlin
i dont know which way the market is going to go, but one thing is clear. the market is anticipating a 25bp raise, AND, more importantly, language in the statement that signals a pause. the only doubt that has been brought to this second part is the comments bernanke made to maria bartaroma last week. but judging from the market's behavior lately, i think there is high anticipation for pause language.

with that said, if the statement language does NOT indicate a pause, you are going to see the dollar shoot through the friggin roof!
  • #11
  • May 9, 2006 5:44pm May 9, 2006 5:44pm
Quoting smjones
Merlin, was Maria wearing pearls? I heard that is an indicator... Scott
Scott,

where did you hear that this is an indicator?? She wears pearls??

If she wears pearls what does that mean?

thanks
"We are the superior beings, we obey no one!"
  • #12
  • May 9, 2006 5:46pm May 9, 2006 5:46pm
It is in the book Mastering the Trade by John Carter and it is very bullish I gotta tell ya. Scott



Quoting bigballer
Scott,

where did you hear that this is an indicator?? She wears pearls??

If she wears pearls what does that mean?

thanks
  • #13
  • May 9, 2006 5:46pm May 9, 2006 5:46pm
LOL
  • #14
  • May 9, 2006 5:47pm May 9, 2006 5:47pm
Quoting smjones
Merlin, was Maria wearing pearls? I heard that is an indicator... Scott
i have a joke, but find it far too inappropriate
Relax and be happy.
  • #15
  • May 9, 2006 5:48pm May 9, 2006 5:48pm
I say Go For IT
  • #16
  • May 9, 2006 5:53pm May 9, 2006 5:53pm
So merlin,

How would you play tomorrow?

Of course this is only advice and not to be taken to make trades.....

thanks
"We are the superior beings, we obey no one!"
  • #17
  • May 10, 2006 7:13am May 10, 2006 7:13am
Is the reaction to the FOMCs similar to the NFPs?

I'm currently short EURJPY at +250 pips and short GBPUSD at +40 pips.

Should I keep the positions open or close them before the announcement...any advice.
  • #18
  • May 10, 2006 7:20am May 10, 2006 7:20am
kester_albo, what I like to do if I know a major announcement is looming and I am in a winning trade, is to rather than close my trade, move my stop to whatever amount of pips I am willing to risk to see if the news favours my trade. That way you don't close a trade that might take off in your direction, and if the news is against you, you still are stopped out with a winning trade.

Just my technique ... well done on the successful trades.
You can quit and they won't care, but you will always know.
  • #19
  • Edited 11:28am May 10, 2006 9:20am | Edited 11:28am
LONG time lurker.. first time poster...

If BB even snuffs at a pause today... he will weaken the dollar and the aux markets more than he wants. My guess is he will leave the pause language the same, and the dollar will rebound off recent lows and end up in the low 2700's. He will set the pause up for June after the USD has had some time to recover.

In addition the China statement is most likely dollar positive today too..

I'm short EURUSD at 1.2798.. 10 lots looking for 1.2745.

I don't use stops... rather a hedge at 2830 so I don't get killed on the whipsaw.

I like the retracement play after the big move today too.. after 5pm EST tho.

Good luck everyone
  • #20
  • May 10, 2006 9:53am May 10, 2006 9:53am
Quoting dice
I agree there is a lot of slippage as the announcement hits the wires. If I were to hold a position hours before the announcement, happen to be in the money by 20 pips and decide to move my stops to b/e, will this stop be honored at announcement time should there be whipsaw action? Does anyone have experience doing it this way?

dice
This depends on how powerful the impact of the statement were to be. Don't be under any illusions that your broker will fill your stop if you move it to B/E and the price JUMPS beyond that. I have seen requotes of more than 50 pips before (price jumps 50 pips without moving through the previous 1-49), and at that point even take profits may not be filled. I haven't seen this happen in a while, and i suspect a jump of 10-20 pips would still occur, but nothing drastic like I've seen in the past (especially PRE-election 2004).

If your broker has a "best price" policy, that may trigger your stop loss but there will be whatever slippage the market has.

I'd definitely put the stop loss in place, though...
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