So I had a few e-mails from people who got nailed by the Fed bounce yesterday. It was a good experience if you were trading in a demo account, and a heart break if you were live.

I have mentioned many times over that we don't believe in "trading the news'. If you watched or got burned by the gbp/usd yesterday, you would have noticed today that it came back down almost to yesterday's open, and would have wiped out most losses if any were incurred (provided your stop did not kill you). However as yesterday's forecast hit I am not sure why anyone would have taken a loss.

When I say "trade with blinder's on", what I am referring to is listening to talking heads, news reports, blogs etc. that have opinions that people place trades on. I am not suggesting ignoring event risks (that is why I include it in the forecasts) and try and give you the heads up on volatile events. The night before the Fed, I said I wanted my trades to be complete by the time of the decision, otherwise, don't make the trade.

The Forecasts are not a crystal ball, but they are extremely accurate. They can not tell what a government body will do, but they do pick up on the price action in the charts.

Let me give you an example. Back in the spring the gbp/usd had come out of a roller coaster ride. It was trying to break the 2.000 mark. The rumour for weeks was the BOE was going to raise interest rates. And it charged toward the target. The anticipation was priced into the charts. When the news came out of an interest rate hike, the gbp/usd dropped like a rock instead of climbing like it should. It was a classic case of "Buy the rumour, Sell the news".

A good friend of mine and mentor used to say to me .."news?, what news?.." I was shocked. How could you not pay attention to the news. He taught me that the news was always priced into the charts.

Many of you think that the Forecasts are wrong if they don't hit within 24 hours. Actually my stats show that they have a high probability of hitting within 3.5 days. ( in random sampling durations of minimum 41 days the average of never hitting target is approx 4 out of 41 times). It is very cumbersome and with lots of variables and backtracking, but keep a journal and see the results for yourself. And that is the dilemma, those 4 out of 41 time can be brutal. But there are ways to dodge the bullet.

We have been in pretty much a sideways channel since August. And since yesterday, I don't see a whole lot of direction change from pre Fed Talk.

So where does this leave us, and how should we trade around volatility.

Decide right now. Are you a full timer or a part timer. I don't mean that you solely make your living in Forex, but to be a full timer you spend every available waking moment or reasonable facsimile there-of in front of a computer screen. Where as a part timer wants to pick his trades, protect with profit and loss positions, and trade only when the timing is right. It takes alot of discipline to trade like that, but as I demonstrated with my "30 days to Discipline" it can be done.

By nature Forex traders are impatient. especially in the beginning. They feel they are going to miss something. Here is what I would suggest on how to trade the Forecasts and your expectations.

1) Determine what amount of time you can spend on Forex. With the Forecasts you can spend as little as 10 minutes a day. How? As follows:

• when you receive the forecasts pick your pair based on your risk tolerance. Yen Pairs and the pound pairs are the most volatile, then the nzd/usd, can/usd, euro/usd, then the usd/chf. Then trade no more than 2 pairs and pay close attention to their movements. I pretty much only trade gbp/usd, and gbp/jpy as I have a high tolerance to risk. I would not advise these pairs if you are underfunded or new.
• If your 2 pairs do not have a medium-high to high strength, then say good night. DO NOT JUMP INTO A PAIR YOU HAVE NOT FOLLOWED CLOSELY just to make a trade. Learn to stay out.
• Check to see if forecast hit or came close the night before, and if there is a change of direction predicted or a change in strength. All signs to jump in or jump out.
• I highly advise you learn my simple chart set-up. It gives me a visible understanding of the trend, and what my expectations should be. If the moving averages are slapping off of each other and not breaking away from each other, stay out. I find it a great back up. It is one reason why I had 11 good trades and 1 bad trade in my demo to you. Combined with the Forecasts I was able to "See" the changes in strength and direction.
• check the event risk...NFP's, interest rate, Bank Meetings/Minutes, GDP etc. all will cause spikes. Try and be out before the news hits, or be prepared to hang on for a ride.
• finally time your trade..if the prediction is up, and the pair is screaming down, time your trade, otherwise trust yourself. I will dig up a currency chart I have somewhere and post a little later. It shows the best times of the day and week for each of the pairs. I don't really follow it, but it can be handy for those trying to time their trades.

That is all I do to prep.

2) How much money do you want to make in a year. I have warped my thinking with the Forex, that I am only happy with a return in a month that I would have normally had in a year with a mutual fund etc. (Actually as I demonstrated you can get much more)

So ask yourself, how much can I make if I left my money safe in a bank? 2, 3 6 % a year. A good mutual fund 10, 12 14%. So why does everyone try and make 1, 2, 3000%.

Be realistic and set your goal to match your trading strategy. All you would have to do to make 10% a year, is have an account with $1,000 in it and make $100 bucks. Do you think maybe, you could pick one trade from the forecasts in the next 30 days that could make you $100 bucks?

But since we are in the fastest paced most volatile market in the world we deserve to make more. Right? And that is why alot of people survive less than a year.

So pick a goal, don't over trade, don't go-live until you can string 2 to 3 months of profit together, and don't be in a rush. And please, if you are going to have a trade going during a news event, make sure you are able to babysit it!