For those who have been trading Forex Megadroid for a while, you’ll no doubt have memories of some terrible losses in July 2009 following an FOMC announcement. Some of my accounts lost 120-130 pips in one day! It wasn’t much fun. From memory a smaller loss also happened in June 2009 following another FOMC statement.
The FOMC statement is unique because it’s not only a high impact news event, it also occurs closer to the Megadroid trading session than other reports. Most US reports are released at 8:30 AM EST or 10:00 AM EST, but the FOMC statement gets released at 2:15 PM EST. The Megadroid trading session starts at 5PM EST, so less than 3 hours after the FOMC Statement.
Is fear of the FOMC justified?
I‘m not so sure. Even though we’ve had 2 significant losses following that statement, I’m not sure if that’s statistically significant given Megadroid has only been in use for about 16 months.
I’m also not convinced that news-related volatility is necessarily a bad thing for Forex Megadroid. For example in May 2010 there was a lot of volatility on the EUR/USD pair late in the US trading session related to economic instability in several EU nations. That month was one of the best for Megadroid, with 12 to 17 trades, and pip profits in excess of 100 pips, and as high as 163 pips. So in that instance, Megadroid took advantage of the volatility.
What will I do?
I’m personally trading as per normal. I don’t like to intervene with EA trading. If I get a loss, hopefully it’ll recover, and there’s always the chance I’ll get some good trades as well. If you’re nervous you could either disable the Megadroid Robot or reduce the lots traded for the day.