Pre-Fed gambling

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

  1. I don’t always have time to watch how stock futures (er, people trading them) behave before a Fed announcement, but when I do I am always amazed, and at the same time repulsed. Volume almost always picks up, and whipsaws are the norm. I don’t really understand it. They must feel that they are going to be on the right side. I would not use the word “think,” since there is little real thought going on.

    As a trader I don’t try to predict earnings reports, Fed announcements, and such. Frankly, prediction is a fool’s game, since it is an impossibility to know the future. I am more interested in how people react once the news is out. I trade emotion, not prices; I want to be on the other side of those who are banging their keyboards and pulling their hair out (Cramer?) because they are slave to their emotions.

    That kind of price action can be gamed and, with discipline, exploited for big money. Any trader worth his or her salt made some money this afternoon.

    Nevertheless, those who were actively trading e-minis and other instruments in the minutes before 2:15 today are not traders. They may post here on “Elite Trader” and consider themselves traders. Heck, they might even be leasing a seat on the CME because they trade so much.

    But they are NOT traders. Instead, they are gamblers.

    Those gamblers might have gotten lucky today by buying stock futures right before 2:15 earned a great return in a very short time (I am not talking about longer term traders or hedgers). Congratulations. You were lucky. Today.

    But unless you were privy to Big Ben’s announcement before 2:15, you gambled today. Yes, you won, but your windfall was achieved the same way as the winners of the Pick 6 Lotto or those who picked the winner of the SuperBowl after listening to Dan Pastorini's hotline.

    Lottery winners who are handed that big three-foot check in a press conference do not receive my admiration.

    After all, who would envy a gambler?

    It is not really that surprising that many who win Lotto fortunes end up having problems after the win--some lose it all, or simply cannot psychologically deal with their luck. Those who win big money gambling might live in a fool’s paradise, but only a fool would consider that paradise in the first place.

    As for today’s pre-Fed gamblers who won, remember:

    Talent had nothing to do with it.

    Trading ability had little to nothing to do with it.

    Yes, it was pure luck, the luck of a gambler.

    Degenerate gamblers very often lose it all. I hope no one on Elite Trader (and their trusting though naïve spouses and children) loses everything. There are some good people on this board, and some of you have taught me a lot. I hate reading stories about people blowing 400K or more because they failed to stick to their discipline.

    But if you got lucky gambling today, count your lucky stars. And your money, before it is gone.:)
  2. It is a gamble, but it is a gamble that have the odds in your favour. We've been oversold and the market has priced in a 25BP hikes. As long as we dont get 50BP, we'll rally. I mean, who else will push things down when everyone in the world has already sold? They need to buy, not sell. So, basically, it is a bet that the fed will not raise 50BP. For sure, this is a bet that is 80%+ in your favour.
    After all, futures is a gamble if you are not a hedger. Is just a matter of identifying the odds.
  3. Yeah, I bought ER2 before the announcemet and sold it with 10 points profit.

    I took risks but I don't think I was gambling. Gambling at a casino you only have less than 50% chance to win, but after observing market performance in the morning session I belived there were at least 75% chance of market rally after the Fed announcement.

    If you don't believe trading before big news that's your way of trading and it's good for you if you are making money. But bashing people who trade before the news as gamblers is purely bullshit. There are always risks in the market and the point is how to control it. If you are not willing to take any risks then why are you trading?
  4. Sorry. Got call BS on your post.

    I don't care if my odds are 50-50 (nor should anyone - you said yourself you don't try to predict the market SO WHAT DO YOU CARE about odds?). Just knowing that I can risk 3 points to possibly capture a 15 point move is more than enough for me to take that trade, no matter the catalyst. The fed announcement happens to be a terrific catalyst... Given this, I question your trading abilities. If you are not able to take advantage of market inconsistencies like these you're in the wrong business IMO.


    P.S. By no means should everyone trade a fed announcement, choosing not to do so is a far cry from directly criticizing those who do.
  5. S-S , I totally agree with you.Gamblers placed their bets on black and red before announcement. Black won this time. red will win next time , the zero and double zero (spread+commish) are doing its job behind the scene.
  6. roctrend


    I agree with Placing a trade pre-Fed is NOT gambling. Pure BS!!When /if you become a WINNING trader you will learn to think 2 steps ahead of everyone else, or fall by the wayside like 95-99% of most traders. Do your homework, it takes hours, but the patterns and setups are there I was slightly long and hedged to longside. IF I was wrong then i take a small loss or flip short, If I was rigtht, BASED on murderous hours and years of trading, then the odds were always in My Favor..... and i added, Banked, and humbly get ready for tomorrow. Those that Dont make money should just Sit and LURK and Learn a little before headlining a satement like this...idiotic. Fed days are like taking Candy from a Baby. Do your homework...Dont think like the HERD of Sheep.
  7. I'm well aware , that for today's evening dance , will show up ONLY gamblers that placed a bet on black. The rest 50% are awaiting for their shining moment (maybe in August ? ).
    The floor is yours.
  8. billp


    Actually at times you can tell whether the price will go up or down (ie from early morning till before Fed meeting plus a pretty good guess as to the direction after Fed meeting till the next day)Thus you can actually place a trade in the early morning and exit for a profit before the Fed meeting or hold partially if you have a large enough profit buffer. In fact, this can be one of the safer trades
  9. Cheese


    Completely wrong.
    Nothing to do with gambling.
    Entries into upmoves and downmoves are signaled as is exiting, dependant of course on an accurate methodology.

    Fast paced or very fast paced moves can occur obviously on the FOMC rate announcements as well as at many other times in the daily markets (eg YM). Admittedly trading is a game for men not boys so sometimes you need to be damn quick pressing the button .. so what.
  10. O-ST&P-Bs

    That being said, to me you sound like someone who put his bet on red. And lost.

    I don't call out people on ET who choose to trade at arcades. I don't call out people who choose to search for holy grails. I don't call out people who trade retail forex with heavy leverage. To each his own... But, I will call out someone who has no business writing this post, let alone starting this thread. You obviously do not yet understand the intricacies of trading. I can tell, just by your post, that you: 1) are probably a small retail swing trader who had aspirations of making a killing as a "daytrader", but couldn't properly manage your risk, so you decided to cut a large portion of your losses by eliminating your excessive commissions 2) don't understand why other traders would want to trade anything other than what you are trading, or in any time frame other than what you are trading in. 3) don't understand how they make money doing it.

    Whether you're making money or not, you are bitter because you choose to not relate to others who are. "Fuck him, he makes 100 trades a day, what an idiot. Gamblers always hit bottom... I'm glad I take no risks. My favorite ice cream is vanilla. Sometimes I go crazy and spice it up with a single cherry, but I always check for pits and properly remove the stem beforehand..."

    When life gives you a bunch of lemons...

    You should sell them to a grocery store, not store them in your trading room.
    #10     Jun 29, 2006