News And Holidays

News and HolidaysOur markets are closed for Thanksgiving today since it is a US banking Holiday. The trend as we know is usually to the upside ahead of the event. If it doesn’t happen prior to the event then it usually happens right after any long weekend. All of this bullishness has certainly spilled over into this week.

Early next month, we have the Nonfarm Payroll (NFP) event on Friday. Remember this event announces it data at 8:30AM EST when the markets are closed. How can Economic news events impact our trading and how do we protect our positions?

Economic News and Trading

Economic news takes place almost every day at different times. Most of these news events don’t really impact our Investing, Trend or short term trades. However they would impact any Intra Day styles of trading. News events that most impact our markets are Federal Open Market Committee (FOMC) meetings and Nonfarm payroll (NFP). There are other news events that take place at 10:00AM EST.

I don’t really care about these events however if it is my day of exit for either Investing or ST trading and I see that the position opens positive then I do like to exit prior to 10:00AM EST just in case there is some type of news event that causes my position to go against me. Maybe the pull back is not by much however still best to exit prior to the event on that exit day.

FOMC and NFP

Both of these news events have different reasons for being volatile. FOMC deals with interest rates in the US. The lower the interest rates, the better for companies to borrow and grow their businesses, the better for the overall economy.

NFP is announced the first Friday of each month at 8:30AM EST (when the market is closed). It deals with the number of individuals who may be losing their jobs in the US. The US economy is currently fueled 2/3 by the consumer. It creates a domino effect. More individuals losing jobs, less purchasing power, the lower the Earnings on stocks, the lower the stock market goes.

The NFP is not an event I look at all the time. When I began trading I never looked at this number. However it takes center stage when the unemployment rate begins to climb and that economic domino effect may begin to take effect.

Protecting Our Positions

If I am in a longer style of trading (Investing or Trend Strategy) then I will make sure my stop loss is at my entry price (following the adjustment of my stop loss rules). I will then hold my position through these events knowing that in the event I am stopped then I have either captured my profits or at least did not lose. I do not hold any short term trade (those where I plan to be in for 3-4 days) through these events at all.

If I am not in either an Investing or Trend trade then I will not open a position a few days before these events since I am not giving my position any time to go through, adjust my stop loss and go my way. I don’t want to enter a trade, have any of these two events happen just two days later only to then get stopped out.

Usually what happens is the professional traders sit out the day or are hedged in their positions so we are left with the floor traders. They can run the stops on the Put options and then run the stop on the Call options and everyone gets stopped out. So best to be stopped with a profit!

Happy thanksgiving and may everyone have a safe, pleasant, blessed and prosperous trading week!