Fed’s interest rate – Volatility ahead

Dear members,

I want to remind you all that tomorrow at 7:00PM (GMT) The Fed will announce their interest rates.

Now it is very hard to say whether the Fed will raise the interest rate for the first time since 2006, or not. This post is not to speculate on whether the Fed will raise the interest rate or not. Instead I wish to remind you that, regardless of a hike in the interest rate or not, the market will likely become more volatile after the announcement.

Please take this volatility in account when it comes down to managing the risk of your portfolio. It might be wise to adjust your stop-losses, as tight stop-losses are likely to be taken out. It would not be the first time that the market shows large spikes up and down in short-time frame after big news. These spikes could potentially take out stop-losses on both sides.

Furthermore, a large exposure to either the downside or upside is perceived to be more risky in these kind of situations. Therefore it may be wise to build up a more neutral position, or to reduce the seize of your position, when you do not wish to be exposed to the risk forth flowing from high volatility.

I wish you all the best with your trades and when you have any question do not hesitate to ask them!

With kind regards,

Martin Odink

Leave a comment

Your email address will not be published. Required fields are marked *