Leaks before FOMC?

Discussion in 'Trading' started by Pekelo, Jun 29, 2006.

  1. Buy the rumor, sell the fact? Maybe a little of that already.
     
    #11     Jun 29, 2006
  2. are you offering your programer's skills ?
     
    #12     Jun 29, 2006
  3. Well, if you trust the poll here, the people who forecast a 25bp hike outnumber those who forecast a 50bp hike by the rate of 77:9. If this is indeed the market consensus, it probably means that the market will rise slightly in case of the actual 25bp hike and drop substantially in case of a 50bp rise. However, the former outcome 8.55 times more likely than the latter (77 / 9 = 8.55).

    Futhermore, if the 50bp rise does occur, the subsequent drop will not be 8.55 times bigger than the rise in the event of a 25bp rise. Therefore, the risk/reward odds are on the long side (with a tight stop).

    Well, if only the markets were that rational as my analysis, and if I had the guts and discipline to follow it, I'd probably be a good trader. :)
     
    #13     Jun 29, 2006
  4. I always take a leak before the FOMC.
     
    #14     Jun 29, 2006