How Federal Funds Rate, FOMC Statement and FOMC Press Conference Impact the Stock Market

An emotional Vahid opened proceedings with our anthem “Amazing” and the faces of those joining the room were filled with glee and afterwards Vahid showed his huge appreciation. Watch the telegram replay to get the full picture on his reaction, and watch, like and share the anthem here: 😀

On to the business of the day, we had important news being released with the FOMC meeting announcements at 2:pm.

This was huge news with much dependent on the result of the news where the Federal Reserve interest rate announcement was due.

Usual Effect…. More hawkish (increasing interest rates more than expected) is good for currency; however good for US Dollar this means it can be bad for the markets.

The FOMC usually changes the statement slightly at each release. It’s these changes that traders focus on;

Why Traders Care……… It’s the primary tool the FOMC uses to communicate with investors about monetary policy. It contains the outcome of their vote on interest rates and other policy measures, along with commentary about the economic conditions that influenced their votes. Most importantly, it discusses the economic outlook and offers clues on the outcome of future votes;

Make no mistake this news is perhaps the most influential news in any month aside from war etc. On this basis as we were moving closer to the news, Vahid did say it is not a good time to trade today.

However, Vahid had already seen the move lower as seen in the chart earlier in the day about 06:30 his US time.

Vahid sold at the point marked in the chart before the US 500 opened , since the sentiment was very bearish, we broke through the red support line. The earlier news release was at 08:15 am and was “Automatic Data Processing”. This Measures Estimated change in the number of employed people during the previous month, excluding the farming industry and government; the result was way higher than forecast!

Usual Effect of greater than ‘Forecast’ is good for US DOLLAR; This often means we see a dip in the US 500 markets. This data provides an early look at employment growth, usually 2 days ahead of the government-released employment data that it’s designed to mimic. Job creation is an important leading indicator of consumer spending, which accounts for a majority of overall economic activity;

Vahid was seeing the move south and took a position and got his 2% shortly before the zoom room opened. We saw the move south continuing as expected on market open with a hawkish day likely as the FOMC news became ever closer.

Vahid explained once again how moving the stop loss once into profit (once our position is in the green and profitable) can lock in the profit in the event the market reversed. However it is a strategy that is dependent on market conditions. Today with the volatility very high due to the news release at 2pm he confirmed that this was a good strategy. This way since a profit was already in place move the SL to a profit taking position was good option.

To repeat however Vahid did not advise a trading position on the US market open today as the volatility was going to be massive and dependent on the huge news being released later at 2:00pm.

With Vahid bagging another 2% today ( I also took the early trade before the room opened) we are on track for another good week to start our November trading.

We could all have traded the early part of the day while the global markets pushed the market below the red support line before the US 50 OPENED.

During the Q and A session we covered in detail drawing trend lines on MT4 Support and resistance. This is a short video here which is an excellent session Vahid did today with Maryam.

The Zoom room opened again at 1:30pm today US time to discus and see the market reaction to the news.

Thanks in advance for all the nice comments on these posts, and also the huge interest in our choir song we posted on YouTube earlier.

If you have not seen it yet it is here ….Enjoy:

How Federal Funds Rate, FOMC Statement and FOMC Press Conference Impact the Stock Market

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By Vahid Chaychi

To learn more about me, please visit the about page.

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