Using a large number of previous ECB monetary policy statements and press conferences as the bases for analysis, of which the chart on the left above, showing the situation on the occasion of the December 2014 event, is one, we were able to set the parameters of the OmiCronFX Mandelbrot Forex algo routine to give the best possible chance of making decent profits during and after yesterday’s event. Paramount in our considerations was the requirement, as always, that if it could not take profits out of the market, it would not at least lose money.
The chart on the left is the simulated situation during the December press conference, using the historical tester on the JForex platform. The chart on the right represents actual trading, yesterday, March 5th 2015, also during the press conference. In each case the parameters of the Mandelbrot routine are exactly the same.
Trading the ECB monetary policy press conference
The press conference was held on this occasion in Nicosia, Cyprus. In the event, the monetary policy statement contained absolutely no surprises at all. Prior to the President of the ECB, Mario Draghi, making his opening remarks, the EURUSD pair moved a little, to the upside. It looked as if the selloff in the Euro on the previous day was regretted somewhat by the main market participants, who were reversing their positions. However, this move was not sustained. During the answers to the questions from the assembled journalists, the exchange rate went into reverse but, once again, this move was stalled before it had a chance to develop.
After the initial, relatively low-level bout of activity, the rate went resolutely sideways. Mandelbrot tried. It took two trades in all, both SHORT (expecting the rate to continue to fall) but both were stopped out at break-even. It is a well-established fact that a trader can only take out of the market what the market will give, and on this occasion there was no give.
The risk reduction and cash management part of the routine did its job well. There will be other opportunities for profit.