My Favorite Way To Trade Headlines

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Headlines can move markets in a blink, whipping traders out of positions before they can even react. You do not have to let them control your trading. All you need is a plan you trust. That is what kept me grounded this week.

On Tuesday morning, I was walked the room through an ES trade: long from the 26 mark, with a target on the 88 level. This was a normal 'Golden Setup' executed in the futures room with everyone watching. Then a headline dropped about Iran, and the dome disappeared.

I commented, "If you're sitting in a trade and that news hits and your dome just disappears, price just completely goes away, and you got to kind of look for it."

The order book emptied out. Impulse bars of 105 and 158 handles printed back to back.

If you were on the right side, your bracket either took you out at breakeven or you were staring at a runner. If you were on the wrong side, you were in trouble.

I was on the right side because I had direction. I got my 62 points across all contracts, and the only reason it worked is because I had a plan mapped before the headline ever hit the wire.

The Noise Was Relentless

Every session had something, from Iran military exercises to ceasefire talks to White House press briefings to crude oil pushing over $103. The news flow hit at all hours, whether it was overnight, pre-market, or at the close. After all, "Either overnight, pre-market, at the close, sneaking it in when the real money is not doing anything."

Last Thursday, a White House press secretary headline about Iran popped up mid-session. I saw the impulse candle forming and told the room we were going to fade it.

I was already short the 06 based on my levels. The headline created a quick spike, and the price rolled right back over. I said at the time, "They can throw everything they want at it. It's just got to run its course here."

The next morning brought the same thing, and the morning after that was no different. By Tuesday, we had seen multiple overnight headline-driven rips that got sold the next day.

By Wednesday's pre-market prep, another ceasefire headline launched a massive bar in the futures. The Nasdaq printed a 150-handle candle and the ES printed 39 handles. Both got faded almost immediately. I commented, "It's just a headline. There's going to be plenty of those."

If you were chasing those bars, you were buying the top of a headline spike and selling the bottom of the fade. The traders who had their plan already mapped were the ones who stayed out of trouble.

The Plan That Held

Here is what my week actually looked like underneath all the noise. On Tuesday, I came in with a simple thesis. If the bulls could sustain trade above the previous day's high, they could run.

Crude was over $103, which meant headwinds for any sustained rally. The news flow could create pops, but sustained buying was unlikely with oil at those levels. "You can't have crude over 100 and have equities ripping. It just doesn't work that way."

That gave me a framework. I was on bounce watch, and my confirmation was a break above the previous highs. Below that, pops would get sold. Within that framework, I traded a clean Golden Setup, long the 26 mark, out at the 88 level, and 62 points on micros.

The 100-handle block had given me the directional signal. From the 50 mark, a close above the 62 level meant higher prices were owed. The 33 figure was my line in the sand. As long as that held, the target above was in play. I stated, "All I was doing was following my plan."

None of that required me to have an opinion about Iran or oil prices or what any press secretary said on television. The levels were mapped, the direction was clear, and the trade was there.

On Wednesday morning, I walked the room through the same top-down process. We started on the daily chart, went to the four-hour timeframe, and then the hourly.

The Nasdaq had just printed a 1,000-handle daily candle. The ES put up 230, and the natural instinct after bars like that is to assume the selling is over. I told the room the rally was too far, too fast. The farther the price goes without any back and fill, the more dramatic the eventual pullback becomes. I identified the 24,250 area as resistance on the Nasdaq and the 24,000 mark as the bull/bear line. On the ES, 6,500 was the level to watch.

If the bulls could not hold the pre-market low at 6,575, then there were 60 points of downside to weekly pivot. I said at the time, "I don't have a dog in the fight either way. I want to just have a market that moves."

That is the mindset that keeps you alive in a headline tape. My job is to have the levels ready so that when price resolves, I know where to get involved and where I am wrong.

Why This Matters for You

The biggest danger in a headline-driven market is the temptation to trade the headline instead of trading your plan. Both buying a ceasefire spike and panic selling an Iran headline put you at the mercy of information you cannot verify in real time.

Your levels do not change because a press secretary said something. The 26 mark is still the 26 mark, the 77 level is still the 77 level, and the opening range still establishes direction.

When a headline hits mid-trade, there are only two things that matter. You need to know whether you had the direction right, and you need to know where you are wrong. After all, "It's about getting the direction right, because we as day traders, that is at the core of what we do."

On Tuesday, I had the direction right. The impulse bars were violent, but they were moving in my favor. If I had been short, I would have known I was wrong the moment price closed above the 62 level. The levels told me that before any headline ever printed.

This tape is going to keep producing headlines. Crude is going to keep making noise above $100, and geopolitical developments are going to hit at random hours. None of that changes the process. Map your levels before the open, let the opening range tell you who is in control, define your risk on every entry, and when the headline hits, check price against your plan.

That is all you can control, and it is all you need. See you in the room on Monday.