Anticipating a large move , direction unsure

[Superion]

What's a good buying/selling strategy to employ when you know a move is about to occur but don't know in which direction it race off to?

For example the Bernanke Conference yesterday was sure to spike the market in one direction or another.


Is going flat an option?, e.g being both long and short at the same time and closing the error.


Cheers

 

[Hakuna Matata]

1. read this thread

http://www.trade2win.com/boards/discretionary-trading/172660-can-you-long-short-same-time.html

2. read one of these books:

Options, Futures and Other Derivatives: Amazon.co.uk: John Hull: Books

or

Paul Wilmott Introduces Quantitative Finance: Amazon.co.uk: Paul Wilmott: Books

3. read this book

Option Volatility & Pricing: Advanced Trading Strategies and Techniques: Amazon.co.uk: Sheldon Natenberg: Books

good luck

 

[Jason Rogers]

What's a good buying/selling strategy to employ when you know a move is about to occur but don't know in which direction it race off to?

For example the Bernanke Conference yesterday was sure to spike the market in one direction or another.


Is going flat an option?, e.g being both long and short at the same time and closing the error.


Cheers

Hi Superion,

Welcome to the forum

It's important to keep in mind that being long and short at the same time in a given currency pair or futures contract is like having no position at all. You're better off being truly flat with no open positions and just waiting until you've decided what direction you want to play. At least then you only pay the spread once instead of twice.

If you want to make a pure volatility play, then this can be done with options as Hakuna Matata already suggested. However if you want to make a directional play and want to use the volatility from the news event as a catalyst, then you can get some cues on which direction to favor based on current trader sentiment.

In the futures markets, there is the Commitments of Traders (COT) reports provided by the CFTC: Commitments of Traders - CFTC

[Details Removed]

Jason

 

[Hakuna Matata]

nice job VG

does he get a warning for that or what?

it's not too far a stretch of the imagination that dailyFX and FXCM are related...

 

[wackypete2]

nice job VG

does he get a warning for that or what?

it's not too far a stretch of the imagination that dailyFX and FXCM are related...

Yes, they are related. FXCM owns dailyfx.com.

Peter

 

[rsh01]

go long a straddle on the future?
buy volatility?

 

[numbertea]

One can use cumulative bid ask to discover buy sell pressure and take advantage of finding the green fake out bar 14:00 right before the announcement. I actually picked up on another signal a little earlier, also indicating the lessening of upward price movement. Here is my 5 minute ES chart, rose blue is the buy sell pressure 30% to 70%.

Cheers

PS Thanks to WackyPete for his broker suggestions that pointed me to one that is great with an excellent API.