Thursday 3RD NOV update
At 08:30 BIG NEWS is released tomorrow (Friday), so our meeting starts at 08:15 (1 hour earlier)

Yesterday Chairman Powell said employment was good, but inflation pressure is still a problem. The fed increased rates by another 0.75%.
On the back of this, we saw a steady further decline in the US 500 while the dollar strengthened of course. As the questions continued after his announcement, journalists pressed him for a number of insights into the sentiment around future rate rises etc. He was steadfast in his commitment to tackle inflation and to see a definite decline until the inflation rate is down to a manageable 2%. He did say however that rate rises may ease if there are clear signs the inflation is coming down.

TODAY …With the market opening and bearish momentum seemingly NOW locked in, we quickly saw more downside action and Vahid (never wanting to buck the current trend) on the opening bell took a sell set up with the usual stop and take profit positions placed. He sold at 3722 and then we witnessed indecision in the market with no clear direction being shown during a slow period. With slow market conditions we commenced the Q and A session.

We discussed the astonishing move up yesterday during the opening minutes of the FMOC meeting. If you look at the chart from yesterday and today. The first 30 minutes saw a frantic move NORTH! This was unexpected as the news of the 0.75% was pretty much what was expected. With the dollar continuing to gain strength, we naturally expected a move down on the US 500

The US 500 has always been predictable and reliable measure of market sentiment. While this move had people scratching their heads, from my crypto background, we used to see this behavior all the time. BUT WHY?

Vahid touched on this during the meeting when he said the Market maker who proves the liquidity in the market is there to create a lucrative business model and he becomes more lucrative when he is able to liquidate positions held in the traders sell and buy positions. WHAT DOES THIS MEAN?

We initially saw the big rise at the start on yesterday’s new release. Most of the market were either in a sell position knowing the rate rise would strengthen the dollar and weaken the US 500. So all these traders would have had a stop loss in place ABOVE the sell position. (See chart below)

So what we saw was a classic “crypto“ type “stop hunt rise” This is when the market makers intention is to reverse the direction once they have made a run for the liquidity. i.e. liquidated all those traders who had their stop losses set around the area of the arrow in the chart.

So the marked was pushed higher and bulls were getting excited and jumped into the rising market, setting their stop loss below the opening by position. The market maker by this time had liquidated all those initial sellers who got stopped out and liquidated. Then the market turned sharply down. This then liquidating all the buyers who were believing the market was going to continue UP!

The moral of this story is that as Vahid has said all along on days with strong news this is never a good time to trade for the very reasons we have highlighted above. Let’s be perfectly clear on this DO NOT TRADE BIG NEWS EVENTS!

At 10am the other news today was released…
Institute for Supply Management Usual Effect ‘Actual’ greater than ‘Forecast’ is good for currency;
Frequency Released monthly, on the third business day after the month ends;
Indicates industry expansion, below indicates contraction.
Why Traders Care It’s a leading indicator of economic health – businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company’s view of the economy;

This news was worse than forecast which was bad for the dollar and inevitable we saw a quick rise in the US 500 of almost 1% in just 30 minutes! Fortunately we anticipated a move like this so we were able to manually close out our original positions with a profit of around 1%


Please look at the chart below to see how the trend lines of support and resistance lines were drawn and so helpful to the trading.
Also read the text in the chart to better understand the huge volatility and the way the market maker could in certain markets like crypto or even Forex markets has the ability to manipulate the as we can see in this example despite what should have been a sell set up on the release of the news.

ONCE AGAIN AS VAHID SAYS “DO NOT TRADE BIG NEWS DAYS” around the time of the announcements especially.
More tomorrow guys and just to confirm Vahid is still crushing the market!


Well done everyone on making more money today (even if we are all still in demo)

SP500 Long Trade Setup

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