Debriefing of yesterday's FOMC IWM/TZA discretionary trade

[Wei]

Hi Billy,

To summarize, you are using the more conservative of (VWAP, Volatility stop) as your initial entry stop, right?

[Billy]

Hi Billy,

To summarize, you are using the more conservative of (VWAP, Volatility stop) as your initial entry stop, right?

Wei,

Yes, but it is almost always VWAP that will be the most conservative initially.
I present here a successful trade (with big reward) but maybe 60% of them are stopped out at VWAP with microscopic losses. If you do such trades outside of a news event reaction, the failure rate will increase dramatically maybe over 80%. That's why I always wait for a programmed news reaction, where price usually waits near VWAP and I play the first successful pullback above VWAP if long, or the first failed bounce below VWAP if short. I prefer to see cumulative TICK trend confirmation before taking the trade.
Billy
Billy

[Wei]

Thank you so much, Billy.

I really appreciate you sharing all your insights from many many years of trading experience. This is priceless. All the other subscription services that I have visited, they only tell you what to do, but rarely teaches you how and why. What you and Pascal are doing here is really beyond generous. Truly appreciate it.

[adam ali]

Billy,

I know yesterday it was recommended we pay no attention to the $TICK prior to the Fed announcement. Yet, it's interesting in reviewing the chart to see that the trend had been negative pretty much all day. I can only assume it's been yours and Bob's experience that tick direction can change on a dime when the Fed speaks, and it was only by coincidence yesterday that the trend continued in the same direction post-announcement as pre.

[Billy]

Billy,

I know yesterday it was recommended we pay no attention to the $TICK prior to the Fed announcement. Yet, it's interesting in reviewing the chart to see that the trend had been negative pretty much all day. I can only assume it's been yours and Bob's experience that tick direction can change on a dime when the Fed speaks, and it was only by coincidence yesterday that the trend continued in the same direction post-announcement as pre.

Adam,
Large institutional players make pivotal strategic decisions after such an important event as yesterday. We can see in hindsight that the strategic decisions were massively bearish, but heading into the event, most players will lighten up anyway their risk and positions and book short term profits with mild sell programs. These low-volume programs pushed the cumulative TICK lower but were actually kind of neutral since price was holding VWAP.
On the reaction, you always have an explosion of volume and it meant that, from the time of announcement, the TICK pressure was really serious compared to the morning. If the reaction had been bullish, cumulative TICK would have sky- rocketed instantly to the upside, no matter what it did before. So I prefer to ignore the TICK readings preceding the event.
Billy

[adam ali]

Thanks, as always.

[Normand]

This is a great complement to trading the Robot & better understand what to do when with the indicators used with the Robot. A logical extension.
Thank you Billy.
Normand