The Two-Second Check Before You Enter

The bond market is not my wheelhouse and I'm not going to sit here and pretend it is.

Everybody was asking me this morning what was driving the gap down and I don't have a good answer for you guys. Tariff threats maybe, bonds probably. I just trade what's in front of me.

What was in front of me was the open, and the open was a mess.

And the whole day was if you really think about it.

The SPY gapped down, we flushed lower, and about sixty seconds in there was one enormous candle sitting there that looked like the start of something.

It never really materialized, the SPY ended the day just down 0.29%.

But if you chased the move lower, you got wicked out.

So I’m going to share with you something to help avoid getting wicked out, doesn’t matter if are trading stocks or the SPY this works.

And it takes about two seconds to figure out.

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Here's what people get wrong about a huge candle at the open.

It looks like the move starting. It's usually the move finishing.

Think about what has to happen for price to travel that far that fast. Everybody who wanted in got in, all at once, in a panic, and now that everybody's in, who's left to buy it off you?

Nobody.

That's why you wick out.

You enter on the momentum, the buyers run out about four seconds later, and the candle reverses right back through your stop while you're still feeling good about it.

Okay so the tell.

Look at the candle. Compare the wick to the body.

If the wick is bigger than the body and it's coming at you from the other side, don't touch it. Price went somewhere and got rejected immediately, and that's a trap whichever direction you were leaning.

Big body, little wick, that's real. Big wick from the other side, you're the liquidity. It's just trading logic.

The news version is worse, because news makes you feel like you know something.

Let's say tomorrow Trump comes out and goes, world peace, we made a trade deal with Mars. You get one insane candle, then another one, and price lands right on the level you've been staring at all week.

Do not enter there.

That's an algo bomb. Machines are repricing the entire world in about ninety seconds and every one of them is reacting instead of thinking. You want the news to land, you want the market to work out what it means, and then you want to watch it chop.

Enter on the chop. Does that make sense?

Because what I'm waiting for is boring.

I want price to go flat. Flat at the top, flat at the bottom, I don't care which one, and then I want it coming into my level out of that flat spot.

That tells me the people showing up decided to be there instead of getting squeezed into it.

We don't want to enter on momentum, y'all. We want to be the momentum.

Now, a setup can still work after a big move, that happens plenty. It just means you size it smaller and you know exactly why you might be wrong.

So do this tomorrow.

Watch the first fifteen minutes and do nothing. Then when a candle shows up that you want to trade, look at that wick against that body before you touch anything.

If the wick is winning, you were about to be somebody's exit.

Rock On,

Voz

P.S. Trading with me can be fun and profitable. But don’t take my word for it. Join me in my live trading room for the next 30 days at no cost. See for yourself!