A Memorable E-mini Trade From 2006
My love in the market is stock index futures. I trade stocks and options,
but NOTHING comes close to stock index futures, in particular the ES (S&P 500
emini). Everyday I cannot wait to see what it brings to trade, but eight times a
year I get that little extra adrenaline. Some of you have already guessed what
event happens eight times a year and for the rest of you it is FOMC (Federal
Open Market Committee meeting). There is nothing like the volatility that day
brings for traders. Futures whip all over the place and with proper timing you
can do very
well.
June 29, 2006 was the last meeting and it created a huge move. Ahead of the
announcement I preset orders to buy at 1266 or to short at 1262. The buy filled
and ran 11 points before stopping. I took 10 points and ran. Reloading the next
trade off the pullback at 1271.50 and trailing the stop into the end of the day
to close out at 1282 for another 11.50 points. Not staying in initially from the
first buy is because history on FOMC days does not lead to a trend day, but this
day was the exception so required a second entry in the same direction. In my
nine years of trading that was a first and the market did not reverse or fade
from the original reactionary move.
My targets are always set to take advantage of the volatility, and, not knowing
which direction it will move, you have to be fast on the trigger or pre set
orders. Several factors were leaning to a rally in the market for the last
meeting with all the speculation of it potentially being the last rate increase…
we were poised for a rally. However, because the market does not usually move in
just one direction off the announcement it was a day to be adaptive. This
meeting was Chairman Bernanke’s second showing and the market wanted to be
finished and find reason to rally so it did for that day anyway.
There are timing tools like the TICK, oscillators and then basic Fibonacci to
give you levels to see the index move to. But the best way is to let the
announcement come out and know the targets ahead of time and go in as the TICK
is moving. Certainly not a trade for beginners, but even beginners can take
pieces out of the move and lock in a very nice day with very little risk. So
anyone can enjoy FOMC and wear the party hat with all FOMC watchers.