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Central Bank Trading: Scene of the Crime

S&P 500 and EUR/USD 8 November 2018 FOMC meeting

As the 8 November FOMC meeting was not a quarterly meeting, where policy changes customarily take place, expectations for anything new were extremely low. Hence, going into the meeting, the only available trades were outliers. When nothing new came from the FOMC it was time to start considering where positions are taken in the hope some kind of move would start to unwind to give a trade opportunity.

The Scene of the Crime, where a move starts from on an event, becomes a key barometer for traders’ willingness to hold on to early positions. A failure at this point to hold onto the initial move is a signal that a counter move is on and an opportunity to enter a trade. The execution of the entry and scope of how far the trade can go is crucial; if a trade has limited scope then chasing an entry rather than waiting on a more passive entry is a risky trade.

A comparison is made between the S$P 500 and EUR/USD in this live AXIA Central Bank debrief. Both gave an opportunity as the scene of the crime failed to hold the initial move, however the execution differed – passive in the S&P 500 and more aggressive in the EUR/USD the reasons and method of entry are analysed in detail.

An entire week of the Axia Futures 8-week Trader Training Career Programme is dedicated to Central Banks and Event Trading, talking in efficient and effective preparation and execution strategies to maximise potential on such events.

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