As expected, the Federal Reserve hiked interest rates another 75 basis points today.

In the wake of this, I’m being incredibly cautious with my trading…

Even for me, someone with more than a decade of experience as a professional trader, this is an incredibly risky period to be entering new trades.

This brings me to what I’d like to talk about today … how to know when to trade (and when to sit on the sidelines).

One aspect that separates exceptional traders from the 90% who lose money is that they’re picky with their trades.

I first learned the art of selecting trades in Tim Sykes’ Trading Challenge. In fact, that’s where I learned pretty much everything I know about the stock market. (If you wanna learn to trade exactly how I did, click here.)

In contrast, newbie traders tend to trade far too many setups and patterns. This can lead to mental overload, confusion, and worst of all … losses.

You may be wondering … Why should you listen to this?

Well, I bring this up today because I see a lot of inexperienced traders talking about how they’re going to trade the Fed decision…

But most of you shouldn’t be playing this volatility at all. If you’re not an expert on macroeconomics or monetary policy, don’t trade until a clear trend emerges following the Fed’s decision.

Keep reading and I’ll tell you why it’s important to be VERY CAREFUL during the second half of this week (and why I think some traders struggle with playing it safe)…

Why I’m Playing It Safe This Week

As I mentioned yesterday, the price action following this year’s previous Federal Open Market Committee (FOMC) meetings has been wild and unpredictable.

The market has both rallied and tanked due to prior interest rate hikes, which makes it difficult to predict what will happen after this week’s decision.

Uncertainty is one of the worst realities to face as a trader, and in general, the market hates it more than anything.

This is why I’m being cautious this week…I have no problem admitting that I have no idea what the Fed is gonna do or how the market will react.

In the wake of such uncertainty, I’m not trying to be a hero and nail a clairvoyant prediction about the Fed decision.

In my view, it’s better to wait for the decision, then reassess my strategy after seeing the immediate market reaction. 

But sitting on the sidelines isn’t easy for some traders and I think I know why…

A Note About ‘FOMO’

I’m an experienced trader, which means I know when it’s time to trade and when it’s time to wait.

But newer students may have trouble sitting on the sidelines during such a volatile week…

I get it. It was hard for me to rip myself away from the charts when I was first starting as a trader. 

Some newbies operate under the false pretense that they need to trade every day.

This is a fallacy. And in my opinion, it comes down to one root cause … FOMO. 

The ‘fear of missing out’ is a trap that you must avoid if you’re aiming for long-term success as a trader.

You shouldn’t be tempted to trade a setup just because you see some other trader talking about it on a message board…

My top student, Jenny Smith, understands this better than just about anyone. She’s proven that she has an incredibly strong conviction in her game plan which has led her to become an options-trading beast.

(If you’d like to learn more about how Jenny went from a stay-at-home mom to a world-class options trader, click here.)

But for now, I’ll let you in on a hard truth … Sometimes your setups just aren’t there, even when the market conditions seem to be playing into your overall strategy.

When this happens, it can be frustrating to watch other traders crush it while your account languishes.

But this is where you have to dig in and stay DISCIPLINED, keeping a serious conviction in your game plan.

Giving in and trading a subpar setup is the worst thing you could do. (If you do this, you’re letting FOMO control your trading!)

Do the opposite. Control your FOMO to help set yourself up for success.

As an options trader, you should be like a Zen master — confident in your mindset and discouraged by nothing. 

Final Thoughts

I know it’s not the most exciting game plan out there, but I think patience is the name of the game today.

Again, I’ve been trading for 12 years and I have no idea about the Fed’s decision or how the market will react. If I’m not trading this uncertainty, you probably shouldn’t be either.

On the bright side, after today’s decision, we should finally have some clarity on near-term monetary policy and market direction. 

Only then can we start eyeing potentially juicy setups once again. With that in mind, I’ll talk to you all tomorrow.