If you have any investment experience at all, you have heard of Fed Day. You are no doubt familiar with the “Fed Funds Rate” announcement. You’ve seen the market react to changes (or lack thereof) in this rate. You know that Fed Day affects the market.
This trading holiday occurs 8 times a year. I call it a “trading holiday” for two reasons. Keep reading to discover why.
Fed Day means different things for different Traders. Many Traders circle Fed Day on their calendar, and take a vacation from Trading. They see the wild, unpredictable market movement, and they want no part of it. So it becomes a trading holiday for them – a day that they completely avoid trading.
For other Traders, Fed Day is a holiday because they get so excited for it. They see the unique trading opportunity that Fed Day presents, and they try their best to take advantage of it. The day before Fed Day, these Traders are like a kid on Christmas Eve. Fed Day is their favorite Holiday.
What is it about Fed Day that attracts some Traders like a mosquito to a bug zapper, and drives other Traders to the lake for the day?
Simple. Fed Day causes Wild Craziness (yes, that’s a technical term) in the markets. Across the board. And its more than just the Fed Funds Rate announcement. Sure, this is the primary announcement. But the Fed chairman (Bernake) also makes other various announcements and predictions about the economy and the financial health of the country, and even the world.
And the market reacts wildly to this. You haven’t seen eradict and irrational market movement until you’ve witnessed a Fed Day.
This is what drives many Traders to take Fed Day off. Seems like a good day for picnic for them. No reason to be day trading on Fed Day. They get 8 extra holidays a year. This crazy movement throws off their indicators, destroys trends, obliterates moving averages. They can’t rely on predicatble movement, so they stick their heads in the sand and pretend like Fed Day doesn’t exist.
So why do some Traders get giddy thinking about Fed Day. Because either they: 1. Have discovered how to take advantage of this wild and crazy movement, or 2. They think they have figured out how to take advantage of it (BIG difference here!)
For a Trader who really truly knows how to trade around the Fed announcements, there is no better day for trading. These 8 days a year are often their very most profitable days. They know how to take advantage of this movement.
For a Trader who THINKS they know how to take advantage of Fed Day market movement, these 8 days a year typically represent their biggest losses all year.
There is a fine line between these two different types of Fed Day Traders.
To discover how you can learn to take advantage of crazy market movement like you experience on Fed Day, or to discover how you can learn day trading the easy way, simply enter your name and email address in the following form, and you will receive a FREE copy of our e-Book The Guerrilla Trader – Classified Insider’s Secrets
