Market Commentary 1-27-10 Schooloftrade.com

SchoolofTrade.com Daily Commentary 01-27-10

FOMC DAY!

Today was FOMC Day, which is the day in which the Federal Reserve announces if they will be changing interest rates for the United States.

This type of news event is a MAJOR event that literally determines the entire day of trading activity.

FOMC days are always on Wednesdays, and they are always characterized by the following:

• Slow start to the morning

• Small window of good volume and price action

• Morning session ends early, much like a Friday

• The market tends to ‘flutter’ to the up-side in anticipation of the announcement

• Lunch time lasts until 215pm EST

• The announcement is released @ 215pm EST or a few minutes thereafter

• The market goes CRAZY for 5 minutes

• The market decides on a general direction

• 230pm EST through 400pm EST is high volume, very volatile

On days like FOMC day, we have to be careful.

We know we need to get into the market early today b/c it wasn’t going to last very long.

We also had to use patience to wait for the announcement to be released. This can be tough, b/c the market loves to make head fakes and try to get us to jump into the market on lower volume, but we must stay focused on trading AFTER the 215pm announcement is made.

Once the announcement is made, we STILL need to wait and see if the market will get into any real “form” or trend as it finishes the day’s trading.

All too often we make money in the morning, and then we can’t resist the price action moving so fast post-announcement and we give most of the profits back!

A wise trader knows what he/she does not, so stick to the sidelines on days like today, and know WHEN to be trading, and WHAT to look for to enter in this challenging environment.

We took 5 trades today before the morning finished up.

5 trades, 5 winners = Total of 68 ticks or $680usd.

Only 4 contracts needed to achieve this today!

See you tomorrow @ 745am EST for the live trade room session!

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