Big news days like today

Beginner Questions
1

I trade the GBP-USD pair and usually trade with an automated system in MT4.

On days like today, should I disable the system? I mean big news events days, like when the Fed steps in and cuts the FF rate 3/4 of a point?

Clearly this has volatility implications for the fx markets so would it be prudent to disable my system and wait for smoother sailing?

I have been using the Avonko system successfully and it trades overnight, so today wasn’t a problem, but I’m thinking I should let it rest tonight while the market catches its breath, so to speak.

What do you all think?

2

I would. Most systems traders I know specifically disable their systems around big news releases because the market is going to move in irrational patterns.

Now today you could allmost predict there was going to be a fed cut (i did) but obviously its hard to stay ontop of all of this stuff.

I would say around major rate decisions (FOMC meets, etc) it would be prudent.

3

Good post, thank you for the help.

I have not been following the markets as actively as I would like to just yet, as I am still kind of new. But I am going to make a point to keep well read and up to date on all relevant news, at least for the currency pair I trade, and I’ll take your advice on the system trading.

I was kind of leaning in that direction anyways as it just makes sense from a logical standpoint. The avonko system I have has been working well and I wouldn’t want to blow up my account because of my own ill will, getting greedy and using the system in a way in which it is not really intended.

If I may ask, how did you predict this rate cut? And by predict do you mean the magnitude or the timing of it?

4

Theres no A+B+C=Rate cut… but when the S&P500 futures are down 70 handles overnight and the lock limits are put in place on the markets there is gonna be some kind of action taken by the fed considering the current market climate. We’ve kind of been expecting a suprise cut sometime to try and stop this selloff and this morning was the time to do it before things got incredibly nasty.

I thought they were going to cut .5, but the .75 suprised me.