One of the most important things we can do as traders is to look at the calendar. What calendar specifically? Really any calendar is a great start. That can be an economics calendar (for Forex) or an earnings calendar for example. Whatever it is there are scheduled events on our calendar that affect the way in which price action behaves.
Here’s a really easy one to start with…
In fact, this happened last week.
If you were to pull up the Forex Factory calendar at www.forexfactory.com and head on over to Thursday, January 14th, you’ll notice at 12:30pm Eastern on that day Jerome Powell, the Chair of the Federal Reserve, was slated to speak.
Countdown Trader Tip: For me when I’m looking at a specific event, I’ll have it at the bottom of my screen when looking at the calendar as a whole. Why’s that? If you start your day on Wednesday knowing that you have the Chair of the Federal Reserve speaking around 24 hours later (during the next session essentially), you don’t want to be bearish going into those events as a general rule.
So if you’re looking at an intraday trade on the Wednesday before a Thursday Powell “event” you don’t want to be bearish. Go ahead and take a look at the way the markets behaved last Wednesday and you’ll see statistically that’s similar behavior to how the market behaves before any Thursday Powell “event.” Statistically speaking, we’ll continue to keep that bullish bias right up until he opens his mouth and that’s really where we want to be bullish, and I like to reel my trade in before he speaks too.
Last week those were my trades in the NASDAQ.
Now, this is where the day trading comes in. we have our directional bias, Powell is going to fuel the fire to the upside. So it’s easier to be looking to the long side in front of a Thursday Powell “event.” Then the closer we get into the window where the morning winds down and we get into the actual event, we want to get out of the market.
So what did that look like for us last week then?
Last Thursday we took a long in /ES before the event. That could be anything from a SPY to a SPX trade too. Remember, Gang, it doesn’t have to be a futures trade. We also took a long position in Crude because Crude tends to track with the border average. So then think about stocks and ETFs that generally track with futures contracts. You can be very nimble with a lot of these… just keep the bullish bias.
Then finally we took /RTY, taking advantage of relative outperformers to the long side in front of the Thursday Powell “event” and keep in mind my normal 11:30AM cutoff I always have. But most definitely, I wanted to be flat in front of this particular event.
I wanted to run this by you guys because a lot of times traders tend to get a little too bearish in front of this event in particular. We’ll have plenty of these events throughout the year, and I want you to be able to take advantage of them.