Module 3: Timing the News Spike Entry

The biggest mistake beginners make is entering a trade the instant the news drops. The first few seconds after a release are chaos — prices whip violently in both directions, spreads widen, and many traders get stopped out before the real move even begins. This module teaches you the disciplined way to enter.

What happens in the first 60 seconds

When a high-impact number releases, automated trading systems react in milliseconds. Price often spikes one way, then violently reverses. This initial spike is unreliable — it is driven by algorithms, not by the considered judgement of the market.

The golden rule: never enter in the first 30–60 seconds.

The two entry styles

Style 1 — Wait for the retracement (recommended for beginners). After the initial spike, price usually pulls back partway before continuing in the true direction. You wait for this pullback and enter on it, with a much tighter, safer stop loss. This is the higher-probability approach.

Style 2 — Trade the initial spike (advanced). Some experienced traders enter immediately in the direction of the spike. This requires fast execution, an account with tight spreads, and strong nerves. Not recommended until you have months of practice.

The 5-minute candle method

A simple, reliable technique: after the release, wait for the first 5-minute candle to fully close. The direction that candle closes in is usually the true direction of the move. Enter on the next candle, placing your stop loss on the opposite side of that first candle. This single habit eliminates most spike-reversal losses.

Stop placement around volatile candles

News candles are large. If you place your stop too close, normal volatility will stop you out. Place your stop beyond the high or low of the release candle — far enough that only a genuine reversal would hit it. Because your stop is wider, you must reduce your position size to keep your risk the same (covered in Module 6).

Watch the spread

In the 30 seconds around a release, your broker’s spread can widen from 1 pip to 5–8 pips. Entering during this window means starting your trade already several pips in the red. Wait for the spread to return to normal — usually within 60 seconds — before entering.

Your action step

For your next NFP or CPI release, do not trade. Just watch. Observe the initial spike, watch it reverse or continue, and see how the first 5-minute candle predicts the direction. Practising observation first builds the patience that profitable news trading requires.

Next: Module 4 explains why a “good” economic number can send a currency down — the surprise factor.