Day Trading Strategy | How to Trade The FOMC Announcement

Here is a simple strategy for trading the FOMC Announcement. This is a great strategy if you are day trading the markets.

First of all, what is the FOMC?

Eight times per year a branch of the Federal Reserve Board, known as the FOMC (Federal Open Market Committee), meets to set key interest rates. They also make decisions as to whether to increase (or decrease) the money supply, known as Quantitative Easing (QE).

The time of the announcement is crucial here for this strategy and although this can vary from time to time, it is usually at 7:15 pm GMT (2:15 pm EST). The dates and the time of the FOMC meeting announcement is displayed on the Federal Reserve website.

Step 1:

Open a 5 minute chart of the S&P 500. Then plot the 21 and 200 exponential moving averages (EMA) on your chart. Although I like to execute this trading strategy on the S&P, it works on the Dow as well. You can do this very simply on the charts of ETX Capital Trading Platform.

Step 2:

At the scheduled time of the FOMC meeting announcement (see above), there is usually an initial big move in one direction – this is known as wave A. This first major move is the “true” direction – i.e. where the market really wants to go. (Note: Do NOT execute any trade at this point yet).

For example, here is a chart of the S&P 500 on September 13th 2012, where the FOMC meeting announcement was made 17:30 GMT (12:30 EST). Incidentally this is the same date when the Feds announced QE3.

NOTE: even though the chart says 3-minute, you can do this very simply on a 5-minute timeframe chart.

FOMC trade

Notice the first big move, or the “true” move was in the upward direction as shown by Wave A.

Step 3:

After the initial big move (wave A), there is then a retracement of this move (wave B) which takes the market to at least the 21 Exponential moving average (EMA). This is known as the “fake” move.

FOMC trade

Step 4:

Enter the market when the S&P reaches the 21 EMA with a 3 point stop and an open target. (Alternatively, you can scale in to this trade with half size at the 21 EMA, and then add the remaining half to your position at the 200 EMA.)

Step 5:

What follows is Wave C which is in the same direction as the initial move (Wave A). Close half your position once you have made 3 points on the trade, bring your stop to breakeven, and then use a trailing stop on the 21 EMA for the remaining half.

FOMC trade

In the example of this FOMC trade (above) on September 13th 2012, we managed to make 18 points or $900 per contract. If you were spreadbetting, this would have equated to 180 “spreadbet points” or £1,800 for a £10 per point trade.

Here is another recent example from the last FOMC meeting on October 24th 2012:

FOMC trade

Notice that in the above chart, the first big move (wave A) was in the downward direction – this was the “true” move. This was follows by the retracement rally (wave B). We shorted the market by scaling in at the 21 and 200 EMAs. We then took half profits once we made 3 points on the trade, brought our stop to breakeven and then trailed our stop at the 21 EMA until we were stopped for a 5 point gain or $250 per contract (or 50 spreadbet points and £500 on a £10 per point trade).

Did this strategy help you? Leave me your comments below.

Alessio Rastani is a stock and forex trader at


  1. Hey Alessio,

    I have traded announcements before with mixed success and was wondering about the pullback level to enter the trade in. In my last trade I entered on the trade during the pullback and had some success, but I did it with play money because I was unsure of exactly when to enter the market.

    Thank you for this article, it’s exactly what I was looking for. Does it work for Forex announcements? We are having a rate decision this Tuesday which should definately move the AUD/USD.


  2. Hi Chris. Thanks for your comment. It’s a great question you ask. Although I have not used this strategy on Forex announcements myself, my best advice is to test this yourself on the FX markets and see if you get positive results with it. Each market will have its own personality of course. Thanks. Alessio

  3. Need to stock up on aspirins before I make such trades.

    Thanks for the tips!

  4. Nice and simple Alessio!
    As always, clear and precise, staying true to the k.i.s.s method.
    No smoke and mirrors like you get form the other so called gurus.
    I generally use the fibs for this type of thing. But I will certainly have a 21 ema on chart from now on.
    Cheers m8.

    John D.

  5. Hi Alessio,

    Does this work on crude oil ?

  6. Nice simple strategy Alessio, I shall give it a go. Is this pattern also likely to play out on the metals? Cheers


  7. Hi, Im a little confused, so basically what your saying that the U.S markets are going to go up when the FED make their announcements? Thanks

  8. Strictly speaking there was no setup… however I extrapolated a bit, which I know I should not have done, as assumed the first move was the true move and bought at a low of fake move. Risky but got lucky.

  9. Great call Alessio. Working like a dream on the Dow. 1/2 off and trailing the 21ema
    Thanks for your analysis

  10. The strategy looks very promising for today! However can you tell me where to find out the TIME when the announcement is made. I believe it is usually at 7.15pm (UK Time) but today it was at 5.30pm. Obviously, to implement this strategy it is crucial to know when the announcement is going to be made so could you tell me where it can be found. I could not find it on the Federal Reserve Website.



  11. Thank you very much Alessio!!

  12. Brilliant again. Thanks for the advice.

  13. Alessio & Kevin B. Strike again!

    Traded F.O.M.C. today at 17:30.
    Used 3min TF.
    Entered on pull back into 21 EMA at $1430.
    Took off 50% after 3 S&P points (30pips Spreadbetting) at $1433.
    Moved stop to break-even.
    Took remaining 50% off the table during pullback into advancing 21 EMA @ $1436.

    These instructions could not have been more simple to follow!

    N.B. One observation is to be wary of 50% sell off after 3pts/30pips – as by broker slipped me by about 8 pips. Perhaps it maybe wiser to wait until a solid floor is established at the 3pt level before closing out half the position??

    Overall, fantastic analysis Alessio and Kevin – I am looking forward to the next F.O.M.C.!


  14. Well, that worked really well for me today. 55 Points profit. Thanks Alessio!

  15. Hi Rob – excellent news. Good job on the trade!

  16. Well done Dan. Wow, you followed the strategy to the letter, excellent job. I see your point about the floor in the market, but overall it is very difficult to judge that without some objective reference point (such as the 21 EMA).

  17. Jak – no problem. A pleasure.

  18. Hi James – the link to the Federal reserve website was posted in the article. It was hyperlinked under the words “Federal Reserve Website”. It doesn’t matter, I understand it was not noticed by everyone. Here is the link again: – cheers.

  19. Thanks Steve – glad to hear it worked out for you. Good job.

  20. Alan. yes I see your point. Good to see you made it work.

  21. Hi AJ – no not exactly. All I was saying was that whatever the first move is at the time of the announcement, that ends up being the “true” move”. This could be up or down. You wait for the retrace and you enter at the 21 EMA in the same direction as the first move. Hope it helps.

  22. Thanks Mark. I haven’t tested it on the metals to see if it works on those markets. I suggest that you test it to see if it has the same efficacy on those. Cheers.

  23. Hi Sorhash – I cannot say. I have never used it on Crude oil. I personally have seen it work on the FOMC announcement the best. If you want to use it Crude Oil announcements, you need to test it and see if it works first. Cheers.

  24. Hi John. Cheers, I appreciate that. I do my best to be concise and clear – and I am glad you have found it helpful. Thanks again.

  25. Cheers Ken. either Aspirin, or in my case some stomach digestive pills to stop butterflies. haha. cheers.

  26. don’t have ES right now what else will it work with? stocks etfs spy qqq ????

  27. Hi Russ – yes those should work fine as well. You can also trade it with the S&P or Dow Cash markets (the SPY is fine as well).

  28. Hi Alessio,

    This strategy works very good 🙂 Thanks
    Is it works for FOMC Member Dudley Speaks as well ? 🙂


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