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Tuesday afternoon, the bond auction hit the tape and the NQ ripped against my position.

"I just took a full stop-loss on this trade."

No hesitation. No moving the stop. No hoping for a bounce. The market surged, my stop triggered, and I was out. I watched the trade I had been short move sharply against me, and my only response was to acknowledge it happened and step back.

"This is why stops are what they are. Do we still want that trade? We were short down here, we took a stop right here. Do we still want it? Heck no, we don't want it."

That moment crystallized the single most important lesson of this Fed week. The stop is not your enemy. The stop is doing exactly what you need it to do. It frees you from a position that has turned against you so you can come back for the next opportunity.

Too many traders treat stops like failures. They see a stop hit and think something went wrong. Nothing went wrong. The system worked. 

You defined your risk before you entered, the market exceeded that risk, and you exited. That is trading.

True Acceptance of Risk

Monday morning brought choppy conditions. The 600 level on NQ was in play. I bought the 88 area, looking for a retest of the round level above. Price moved against me. My bracket adjusted. My risk threshold got violated.

"We're out for minus three. This is actually a great session. I'm gonna tell you why. Because this has violated our risk. We've been able to mitigate getting run over completely."

Minus three sounds like a loss. It was. But it was a controlled loss in a trade where my full 15-point stop was on the table. The market told me the trade was not working, and I found a way out with minimal damage.

"We've taken excessive heat on trades and we relaxed and reminded ourselves exactly why we're in the trade to begin with. With the big disclaimer that you're gonna take some heat on some trades. It's gonna happen."

This is what I mean by true acceptance of risk. Before you enter any trade on the NQ, you have to answer one question honestly. Am I okay with this going against me? If the answer is no, you have no business being in that position.

"You have to be willing to accept the risk. You have no business being in the trade, if not."

The Fed Week Reality

Trading into FOMC requires a different mindset than normal conditions. The market grinds. It probes. It runs stops looking for liquidity. Monday felt like the market was searching for something without conviction.

"There's no one at the wheel. So they're just, again, in my opinion anyway, they're just probing for liquidity."

Tuesday brought the same behavior. Low participation. Tight ATR on the ES. The NQ grinding higher into the Fed decision while the ES lagged behind showing divergence. Everyone positioning ahead of Wednesday's announcement was already positioned. The rest of us were left navigating a market that had no interest in following normal patterns.

When the bond auction hit Tuesday afternoon, it carved into the gains I had accumulated earlier in the session. That is par for the course going into Fed week. Weird price action. News hitting the tape at random times. Dangerous conditions for trading, especially in the afternoon.

"I'm certainly not going to just go fire off another trade just because. We're gonna have to let a couple bars close, kind of see what this thing wants to do."

The discipline to wait after taking a stop is just as important as the discipline to take the stop in the first place.

The Santa Rally That Is Not Here Yet

Traders in my room asked about positioning for the Christmas rally. My answer was straightforward.

"I think it's early to be calling it the Christmas rally. That usually doesn't happen on the 8th of December on in a Fed Week. It's just a Fed week, you guys."

The Santa rally typically shows up in the second week of December, not the first. FOMC will be the barometer for whether that rally materializes. Trying to front-run it before the Fed announcement is not trading. It is guessing.

"I think we're early for a Santa rally. I think this thing's, I don't think people are long enough. If you really wanna like put the tin foil hat on, I think we need to flush lower to pick a bunch of people up."

The market might need to take people out before it picks them back up again. That is how these seasonal patterns often work. You cannot position for the rally until the setup actually forms. And that setup requires Fed clarity first.

How to Trade What You Have

Ryan messaged the room Tuesday saying he just passed his prop firm evaluation using the NQ strategy. My immediate response captured everything I have been teaching this week.

"Fantastic. Now listen. Do not, do not, do not, do not. Go blow that thing up tomorrow on FOMC."

The discipline that got him through the evaluation is the same discipline that will keep him funded. You wait for your conditions. You execute when the setup is there. And you stay out when the market tells you staying out is the smart play.

Wednesday brings FOMC. The NQ will be wild. Untradeable on a two-minute chart. Maybe playable on an hourly timeframe for those who can stomach the volatility. But for most traders, the correct move is to let it play out.

"You might be able to trade it on like an hourly chart, but you will not be able to trade this thing because it will be absolutely wild."

Thursday we will see how the market responds. Friday brings more clarity on the Santa rally question. The levels will be there. The methodology will be ready. Whether we trade depends entirely on what the market gives us.

True acceptance of risk is not just about being okay with your stop getting hit. It is about being okay with not trading at all when conditions do not favor your methodology. Both require the same mental discipline.

See you in the room after the Fed announcement.

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