FOMC Day Trading Strategy: How to Trade the Big Moves

FOMC day is one of the most highly anticipated events in the stock market. It’s a day where the Federal Reserve announces its interest rate decision, and markets react with extreme volatility. This means traders have a chance for huge gains—but also huge losses if they’re not careful.

As always, risk management is key, but if you understand the typical market reactions, you can position yourself to capitalize on the big moves that happen during the announcement and the press conference.

My FOMC Trading Strategy

I keep my approach simple and effective. The strategy revolves around two key moments:

1. 1:00 PM EST – The Initial Reaction Move

At exactly 1:00 PM EST, the Federal Reserve releases its interest rate decision. This causes an immediate spike in market volatility.

Typically, there is a big initial move in one direction—either up or down.

My strategy? I fade the first move.

If the market spikes up, I look to short it or buy puts.

If the market drops, I look to go long with calls or shares.

The reasoning behind this? Often, the first move is an overreaction, and the market tends to reverse sharply before settling into a more sustained trend.

2. 1:30 PM EST – Jerome Powell’s Press Conference

At 1:30 PM EST, Fed Chair Jerome Powell begins his press conference.

This is when markets often see another wave of volatility.

A common pattern: the market takes a dip during Powell’s opening remarks.

This presents a strong scalping opportunity to the downside.

Depending on the overall trend of the day, this could be a quick trade or the start of a larger move.

Why This Works

FOMC days tend to follow similar patterns due to algorithmic trading, market psychology, and institutional positioning.

The first move at 1:00 PM is often a liquidity grab, trapping traders before reversing.

The Powell speech dip is a recurring pattern, as the market reacts to his tone and wording.

Final Thoughts

FOMC day is one of the best days for traders, but also one of the riskiest. If you’re not prepared, you can get caught in extreme volatility. But by sticking to high-probability setups and executing with discipline, you can take advantage of these predictable market moves.

Be smart, manage risk, and let’s get ready for big opportunities tomorrow!

Would love to hear how you plan to trade FOMC—drop a comment below! 🚀