Can the Fed Rate Hike Hurt Traders?

by | Sep 20, 2022 | Market Lessons

Dear Traders, 

Bryce here and it’s game time today. Today and tomorrow we’ll get an updated picture of where the Fed’s head is at now that inflation’s not cooling down as fast as we would’ve wanted. 

Keep in mind that when it comes to the stock market, there’s usually an immediate reaction when news breaks but there’s also another reaction that comes once the news has been digested, and it can be the opposite. 

And also another when the Fed minutes are released. Yeah, so, basically it’s topsy-turvy times for the markets, and it’ll take some time to truly suss out where things are going

Of course, there are a lot of educated guesses out there right now, and we’re gonna cover some of them as well as what they mean for you as a trader. Let’s get to it…

What the Fed Rate Hike Means for Traders

Whether the Fed chooses a 75 basis point hike this morning (the most likely scenario), or something even bigger, we’ll continue on this rate hike path for a while. 

The most recent inflation figures pretty much guaranteed that. In fact, they had some analysts speculating if we might get a full 100 basis point rate hike today, but CFRA quelled that fear yesterday. 

But what does this all mean going forward? Especially for traders…

Some have outlined a bullish case for crypto, both in Bitcoin (BTC) and in altcoins, as a response to the latest rate hikes. And I don’t know anyone better equipped to guide traders through big crypto market moves than my trading cohort Matt Monaco.

Millionaire Trader and Crypto Expert Matt Monaco Believes this Could be the LAST Chance to Make this Kind of Money In Crypto...

The last time this kind of Crypto Shock happened…

100,000 new millionaires were created out of thin air.

And according to him, this is the last shock of its kind.

You still have time to get in on this opportunity and make monumental profits, but time is of the essence.

Some traders are anxious about the report a Goldman Sachs analyst put out regarding future rate hikes and the economy, but I don’t think they should be…

Sachs’ chief markets economist Dominic Wilson and global markets strategist Vickie Chang sent a note to clients outlining a potential scenario with a very hawkish Fed. 

The gist of it was that if the Fed had to hit the economic brakes hard enough to get unemployment up to 5%, the S&P 500 would likely fall to below 3,400. In a more serious case, if unemployment had to rise to 6% to hit desired Fed targets, then the S&P would have to fall below 2,900.

Needless to say, that’s pretty scary for investors who might want to buy recent dips. But it shouldn’t be scary for traders. Why? 

Because you should be in cash, cash, cash at the end of every trading day. This is not a market environment that’s friendly to most swing traders. There are exceptions, of course, if you know what you’re doing… 

Matt outlines his strategy for picking afternoon runners that close near their highs in this article. He holds them overnight, but ONLY when they meet all his criteria. 

I’ve made my own gains this year and our non-stop penny stock trader mentor-in-chief Tim Sykes has as well. If you have to choose between trading and investing, I think there’s no better time to choose to trade than right now. 

Conclusion

Trading can be much more nimble than investing, and it can help you sleep well at night, even in volatile markets. 

Why? Because you’re in the driver’s seat. You get to choose how much exposure you want to the markets, and you can wait for the best opportunities to present themselves. 

Right now, there’s something huge happening in crypto, and while the opportunity will build over the next 12-18 months, the chances of great rewards are much stronger for those who get the alpha right now

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