We’d all like to think we’ve got a handle on what’s going on out there. Ideally, we make the right decisions and we make money. Over time the day to day decisions made when trading simplify, and for the most part become pretty routine. Should I buy this? How many contracts of that? Is this looking like a turn? Is it time to sell? – All pretty standard stuff.
However once in a while something “else” comes along….”an event” let’s say – that brings with it much larger implications and ramifications should one “not” make the right decision – and unfortunately find themselves on the “receiving end”.
I believe that tomorrow’s FOMC statement from Mr. Bernanke satisfies all the needed criteria, and more than qualifies as such an event.
Event risk is on.
Now. Everyone has it in their mind of course – that they have “foreseen” the likely outcome (as every evil, narcissistic , arrogant, big shot trader normally does right?) But more importantly do they know “how the market will interpret the information”?
Getting it right yourself is fantastic – and good for you! But….will the market see things the same way that you do? Will the market move in the same direction as you? How can you be certain? What makes you so sure? What in god’s name will you do if you’re wrong?? All things to consider.
I for one can only speak of my own experience, and after as many years have found a relatively simple solution. I clear the deck of any and all tiny outlying positions ( for good or for bad ) and look to re-enter the market after the fireworks have played out.
When it comes to forex – any level of price that is seen “frantically flashing in front of your eyes” during the excitement will be found happily waiting for you again on the other side……. only hours later and with a much stronger sense of direction.
I like to pick things up then.