The Candle That Tells You to Skip the Trade

One of my members, Nina, asked me about a loss last week and I want to walk through it because I think it happens to a lot of traders.

The setup was great.

It was a perfect entry, the level was narrow, and I coudn’t see anything wrong with it.

But it still went red because news came out right around eleven o'clock and just sucked all the momentum out of the tape.

That happens. You can't fight news, it's going to get you here and there and there's nothing to do about that one.

But it got me thinking about what you can control, because there's a thing I look at on every single entry and I don't think enough people are looking at it.

It's the wick.

Quick refresher for anybody who needs it. Every candle has a body, which is where price opened and closed, and it's got those thin lines sticking out the top and bottom, and those are showing you how far price stretched before it got pushed back.

So if you've got a long wick on top, that means price ran up there and got sold right back down. Somebody was sitting up there waiting and they crammed that puppy lower.

If you're looking to go long, don't take a candle where that upper wick is longer than the body.

Think about what it's showing you.

Price tried to get up in there, buyers were pushing, and then a whole bunch of sellers came in and shoved it back down before the thing even closed.

That is the position fighting against you and you're not even in it yet.

And you can see it after the fact if you zoom out, which I do all the time.

Friday, that long wick was the high tick of the entire move and we rolled right over from there. It was sitting there the whole time.

Now this is mostly a five minute thing.

On the one minute you can't nitpick every candle, I don't want to overcomplicate this for anybody, the wicks just don't carry as much down there.

The other one, and this goes for everybody, don't front run it. Let the candle close. Price can wick into your level and pop right back out and now you're sitting in a trade that never should have happened.

Anyway. News is going to news. But the candle you enter on, that one's yours.

Rock On,

Voz

P.S. I’ve got a lot more to teach you, and the best way to learn is in a live trading environment. Which is why I’m inviting you to trade with me for the next 30 days, no strings attached.