How to Trade the March Fed Decision

Hey Prop Traders, here’s are some valuable tips, terms explained and prop firm news for March 18, 2025

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🚨 The Fed’s Big Decision: What It Means for Markets & How to Trade It

Seven weeks ago, everything seemed on track. The job market was strong, the economy had just wrapped up a solid quarter, and inflation—while still a concern—had cooled significantly from its peak.

Fast forward to today, and things feel a whole lot messier.

Inflation may have improved last month, but it’s still running too high for comfort, and fresh tariff threats could push prices up even more. Meanwhile, government spending cuts and job losses are shaking consumer and business confidence.

That’s why this week’s Federal Reserve meeting is a must-watch event. While no one expects the Fed to change interest rates just yet, the real action will come from the dot plot, inflation forecasts, and Jerome Powell’s press conference—all of which could send markets into a frenzy.

If you trade stocks, forex, or futures, this is one of the biggest market-moving events of the quarter—and knowing how to react could be the difference between riding the wave or getting caught in the chop.

Let’s break it all down. 🚀

🕑 Key FOMC Events & Timing

Here’s what’s happening and when:

🔹 2:00 PM ET: The big moment. The Fed releases its policy statement, economic projections, and the all-important dot plot—a chart that shows where Fed officials expect interest rates to be at year-end. Since it’s only updated quarterly, markets will be watching closely.

🔹 2:30 PM ET: Powell takes the stage. His press conference is always a market-moving event, but this time, the dot plot could be even more influential. Traders are pricing in three rate cuts this year, which is more aggressive than what the Fed projected in December. If Powell sticks to his usual “data-dependent” script (which he probably will), the real action will be in how the market interprets any shifts in tone.

🔥 The Main Event: The Dot Plot

The dot plot is the star of the show. 🌟

• Back in December, the Fed projected just 50 basis points (bp) of cuts in 2025.

• In September 2024, markets were expecting four cuts for 2025—a big difference.

📊 How this plays out:

✅ If the March dot plot still shows only 50bp in cuts, that’s a less dovish stance, meaning the dollar could rally ⬆️.
✅ If the Fed signals 75bp or more of easing in 2025, that’s a more dovish shift, which could send the dollar lower ⬇️.

Growth projections will probably be revised down, but the real wildcard is inflation. CPI has cooled since January, but new tariffs could reignite price pressures in the months ahead.

As for Powell’s press conference? Expect him to:
📌 Highlight the resilience of the U.S. economy.
📌 Express concerns about uncertainty.
📌 Emphasize data dependency—over and over again.

🎯 How to Trade the Fed Decision

There are three main approaches traders can take:

1️⃣ Proactive Trading 💥

If you’re confident in the outcome—say, you expect the dollar to drop because the Fed needs more rate cuts—you can position yourself before the announcement. Just be careful: volatility spikes fast, so consider reducing exposure or closing positions five minutes before the release.

2️⃣ Reactive Trading 🕵️‍♂️

This approach waits for the decision, dot plot, and projections to drop. Let the market digest the news, then jump in based on the reaction. Rate decisions tend to create momentum moves, so if the dollar starts falling, it often keeps going.

3️⃣ Stand Aside & Wait 🚫

Sometimes, the smartest trade is no trade at all. If volatility is too high, waiting for the Asia session can be a safer bet. If the Fed’s message is clear, there will still be plenty of opportunities to ride the trend in the European and Asian sessions.

⚠️ Trading FOMC with Prop Firms: Know the Rules

Many prop firms restrict trading around major news events like FOMC, meaning you might not be able to trade before or during the announcement. However, post-FOMC volatility often presents great opportunities, so trading with a prop firm that has no news restrictions, like Axi Select, could allow you to capitalize on the moves without worrying about rule violations.

📅 What to Expect on FOMC Day

2:00 PM ET: The Initial Reaction ⚡

• Fed holds rates steady but only sees 50bp in cuts? Expect a dollar rally ⬆️.

• Fed holds rates steady but sees 75bp+ in cuts? Expect a dollar drop ⬇️.

2:30 PM ET: Powell Takes the Stage 🎤

Right before his press conference, the market may pause or see profit-taking. Once Powell starts speaking, expect a volatility spike 🚀.

💡 Trading Tip: The most important comments usually come within the first 15 minutes of Powell’s speech. Reporters tend to hit the big questions early, so pay attention!

3:00 PM ET: Market Direction Becomes Clear 📈📉

By this time, the market will have digested Powell’s comments, and we’ll have a clearer trend heading into the Asia session.

Whether you’re trading before, during, or after the announcement—or sitting this one out—knowing what to watch can help you stay ahead.

Stay sharp, trade smart, and be ready for the market’s next move! 🚀

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