Central bank day:trade the decision.
Knowing how to trade central bank decisions starts before the decision. The market has already priced an outcome. Your job is to know what that is and what would surprise it.
This is the routine for every central bank day.
Before the decision
Check Interest Rate Probability: what is priced? Then prepare hold, hike and cut scenarios in the Scenario Desk, and note which one would surprise.
The decision and the press conference
The statement gives the first move. The press conference often gives the real one, because that is where the tone comes out. Wait for it before you commit.
Use it in real trading
The tool informs the decision, it never makes it. Here is how it plays out on real trading days.
The bank holds as priced, but sounds hawkish. The currency rises in the press conference. You follow the tone.
An unexpected cut. The currency drops fast. Your plan said to stay out of surprises against your bias.
Mistakes to avoid
- Trading the headline number only.
- Ignoring what was priced.
- Leaving before the press conference.
What makes it different
Rate probabilities, scenarios and the reaction in the headlines all sit in The Event workspace.
Questions
When is the real move?
Often in the press conference, not the decision.
What is a hawkish hold?
No change in rates, but a tone that points to hikes.
Should I hold trades through the decision?
Only if your plan says so and your size allows it.