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I just wanted to update this thread with some observations today.
Again, thanks to @matthew28 with the tip off to econoday. Thankfully i was off work today and was able to observe my charts in real time! Super exciting. It was very interesting to see how the markets really slowed down prior to 2pm, which was expected considering the FOMC announcement. Then at about 2, the price action went crazy and it was interesting for me to watch the freight train roll in with those bars printing as fast as they did.
But I do have a question if ya'll have a few spare moments...
At 2pm, I went on to youtube to watch the FOMC announcement. Interestingly it was a bunch of stupid fed marketing "filler." It wasn't until 2:30pm that Powell started flapping his gums. So, my question is, --why did the market volatility start at 2pm, vs 2:30? Logically, I'm thinking that perhaps the official minutes of the meeting or transcript of his speech is released at 2pm --and that he follows up with his mainstream media appearance. If that is the case, could anyone please drop me a link to where the fed publishes the official release at 2pm? If my guess is wrong, please feel free to correct me. I'm still learning.
The markets don't care that much about the Fed chairman's remarks, which are scheduled at 2:30. The markets care about the numbers, which are released to the press at 2:00.
If you click on the 2:00 event, you will see the number that people care about, the Fed Funds target rate:
If you had checked this page before it was announced, it would have shown the prior rate and the consensus of forecasters and the consensus range. After it's out, you see the actual. This particular site will have this fairly shortly after the announcement, but not in time to act on it. I don't really have any idea where to find the numbers at the time it is announced, but it's out there, probably on the Fed web site.
But for a small retail trader, it would be a fool's game to look for the news and then try to react to it afterward, even if you got it in a millisecond, because you won't know how the other players, especially the very big ones, are going to act. In this case, you can see that the rate was unchanged. So, there were traders who were leaning one way and thought this was great news, and others who thought it was terrible, and they fought it out in the market in a stunningly short period of time. If you try to do this, you will just get killed.
Most traders wait out the Fed gyrations until things settle down, which they will in a fairly short time. Others, hoping to be super-quick, try to grab a bit of the fluctuation and get out with some cash. Some (most who try) probably get whipsawed and lose. It's up to you which game you want to play, but I never try to trade it. After the swings, something will start happening in the market that is more tradable for me. And until then, I am always out of the market going into 2:00 on Fed Day.
It is very tricky to try to trade events like this one.
Bob.
When one door closes, another opens.
-- Cervantes, Don Quixote
By the way, the minutes of the meeting will be released, usually in a month, and usually also on a Wednesday at 2:00, and these will also cause the markets to go crazy for a brief time, as traders try to read quickly to get some clue to the Fed's thinking that wasn't in the bare numbers or the chairman's speech or whatever else was hashed out afterward.
This event should also be approached with care, and for most traders, without being in the market until things settle.
Bob.
When one door closes, another opens.
-- Cervantes, Don Quixote
The actual rate announcement at 2pm will often be as expected, especially now as it is pretty much pegged just above zero. Therefore there will be some short lived volatility as price swings around due to a thin orderbook but then if nothing has changed people go back to waiting for the press conference.
The problem with a press conference over a release of a number isyou never know whether or if something of widespread importance will be said and the only time I tried trading one on sim I just kept jumping in thinking moves were getting going, only to then see them stop and drift back.
Just my own preference but personally I never try and trade that late in the day as the problem is by the time the conference comes round there is only an hour-and-a-half or less left of the stock market session (less for the old regional trading hours session of the Treasuries which used to end at 3pm ET, so an hour earlier), therefore less potential for a long move unlike 8:30am news which could spark a move that runs for the whole day, or at least the first few hours until the lunchtime slowdown.
Also if you make a loss straight away there is very little time to try and recover by waiting for a decent trade setup, and instead could be tempted to push a trade that isn't there just because the clock is counting down to the close.
You do not win as a trader, you just get to play again the next day. If that game doesn’t appeal to you then you should not trade. Gary Norden
Click on any of the little folders under "Detail" and you will see a "Source" link.
Of course, algos have already pulled the release, diff'd it with the previous one, and traded hundreds of lots before you have been able to blink your eye once (not an exaggeration), so, don't think there's any advantage to actually reading the statement as it is released. Plus, that's not the way news works anyway. But I digress. Statement at 2pm will move the market, at least in an environment where rates, etc., matter, and boy do they ever right now. Testimony, speech, or anything which involves non-prepared remarks always has the ability to be market moving, and can launch some real volatility. This is at 2:30.
There are so many "gotchas" here, I honestly don't know where to begin. Let's start with earnings.
Go to finviz.com, "Screener", and screen for "Market cap: Mega" and "Earnings: This week". Anything there is noteworthy, but particularly anything at that $1T+ mark. Basically, anything in the top 10 here: https://www.slickcharts.com/sp500
These have the ability to move the indices, in a very pronounced way. Like today with AMZN. Or, how on Tuesday after the close we somehow got the trifecta of GOOG, MSFT, and AAPL reporting, comprising 9T in market cap (50% more than the entire russell 2000), 16% of SPX, 28% of NDX.
You kind of need to keep up with what's going on enough to know what matters, and what doesn't. PCE/CPI/PPI all matter now, a LOT, due to inflation concerns. NFP usually matters quite a bit, as does the initial GDP reading, to some degree, because it all informs fed policy.
You've been wandering around a financial minefield, apparently for years, without ever trying to map it out ? It's not that you asked the question, it' s the fact you KNEW those numbers (NFP and the like) existed but you never took the time to discover a means of knowing when those numbers get released...and yes 8:30 am is one the those times. Trading is hard enough as it is, not taking the time to gather all possible information is...unfathomable to me and does not bode well at all for your trading career.
I wouldn't rely on a guy at a web site who's color coding these to tell me what's important.
I'm not saying this applies to you, but some people want a "green means buy, red means sell" trading approach and it just doesn't work that way. Two years ago unemployment claims every Thursday morning were the biggest snoozefest you can imagine. Over the last year, they've been one of the most watched weekly releases and have been very market-moving.
There's more to this than even knowing what's market-moving. The question is why? Why have weekly claims been important? Knowing why a release is important means you have a better window into what's driving things. You should understand what the release is, who the source is, who cares about it, and why they care.
"News doesn't matter" .. if you're saying that, you're absolutely right. It doesn't. All that matters are flows. Flows come from many sources, but macro fundamentals do create flows. A trader I respect very much recently said he doesn't even want to know what the number is. Fair enough, and actually many times I do not know the number after it's released. All that matters is the market's reaction to it. However, understanding that the market cares about whatever the release is concerned with, lets you frame things a whole lot differently than being completely blind about upcoming releases.
