When I trade the ES, I avoid trading during the Fed news announcements, and other events that I think would affect the volatility of the ES. But, I am not sure how long I should wait after the news is released to resume my trading? What do your other traders do? I am trying to have specific rules to add to my trading list.
When you say trading list, I assume you mean a set of trading rules you go by? That is a good thing to have! And I would encourage anyone to have a written trading plan that they stick to. It is human nature to want to vary or break the rules, and it takes discipline to continue to act following the established rules. Write out a plan, even if it’s simple at first, and follow it…religiously. It seems that you are attempting to do that for yourself, so it seems you are heading in the right direction!
As far as your question about the news:
The short version is that you resume trading the ES when the volatility of the market has gone back to the volatility that you are comfortable with.
The longer version:
While we encourage everyone to be aware of the significant new announcement that would affect the instrument you are trading, we suggest that you also consider the following things:
- Not all news announcements will adversely affect the markets. There are “anticipated” numbers that are factored in, and there are surprises. The difference between the two will be reflected in the volatility of the market.
In the trading industry, we call it Consensus vs. Actual Number.
- Big market moves caused by news events often don’t move in one direction. The market could airborne in one direction, only to be whipsawed back in the other direction.
- The ultimate direction that the market makes after the news could be completely contrary to what you anticipate, and many traders would be in a state of mind of “what the #$%^ just happened?”. Traders are surprised by the move that is entirely the opposite of the released news. This is because the professional traders placed their positions prior to the news report coming out, and now they are taking profits after the run-up to the news release.
I hope this helps, and maybe others would add some value here as well.
I follow Non-Farm Payrolls (NFP) Report, The Fed announcement, Crude Oil Inventories, and some COT reports. Sometimes, I enter before the news event, and some times I do not, and many times I feel like I am missing big moves that would have been in my favor if I stayed in. Your Optimus News Trader helps me set the alerts, so that helps. Thanks for taking the time to answer.
I think that instead of relying on intuition, you need to quantify your feelings on the news events and not rely on ANY intuition. This means you need to keep a report on an Excel spreadsheet that lists the news event, the market you trade, whether you took the trade or not, and the result that occurred. Maybe you have a winning strategy, perhaps you do not. But only if you have the P&L attached to it after many trades, you will be able to see whether you should drop it or adopt it.