logo

📣 Create Blog for Traders!
Stop Watching news - Start Making it.

START
avatarcommunity
Opinions1 day ago· 4 min read

Don't Trade the Sanctions, Trade the Chart Reaction

Geopolitical news is noise. The real money is made by reading the price action that follows. Here's my playbook for the North Korea sanctions fallout.

These North Korea sanctions headlines are pure trader bait, and most people will get chopped up reacting to them. While everyone else is debating the geopolitical fallout, I'm watching the tape. Because the news doesn't matter—the market's reaction to the news is the only thing that pays.

Look, I get it. A headline drops, and the instinct is to jump in. But by the time you read it, the whales have already positioned themselves. The initial spike is almost always a trap. My edge comes from fading that emotional first move. While analysts like Alex Volkov do a great job breaking down the macro picture, I find that by the time you digest it all, the clean entry is long gone. Price is all you need.

This morning's gap up in defense stocks is a perfect example. Take LMT (Lockheed Martin). It gapped up over 1.5% at the open. The amateurs pile in, chasing the green candle. I'm doing the opposite. I'm waiting for the inevitable retrace to a real support level.

This is one of those classic swing trading strategies that work. You let the hype-driven volume burn out and then look for a technical entry. This is a crucial lesson in how to read candlestick patterns; it's not just about the candle, but the context and volume behind it.

  • Area of Interest: The $451.50 level. This was yesterday's high and the top of the pre-market consolidation zone.
  • My Entry Trigger: A bullish confirmation candle (like a hammer or engulfing) on the 15-minute chart right off that $451.50 support.
  • Stop Loss: A hard stop below $449.00. If we lose that level, the gap-and-go thesis is dead.
  • First Target: Taking profits at the morning high around $455.

This isn't a long-term investment. I couldn't care less about LMT's next earnings report—that's a game for people like Sarah Chen. This is a pure volatility scalp. I'm in and out, hopefully before lunch. The goal is to trade the fear and greed of others, not get caught up in it yourself.

***

The setup is invalidated if price just nukes straight through $451.50 without even a pause. If that happens, I take the small loss and move on. The biggest risk for me is psychological—if I get stopped out, I have a nasty habit of revenge trading. I've been working on it, but it's a constant battle. You have to respect your stops or the market will take everything.

Headlines create emotion. Emotion creates volatility. Volatility creates opportunity. Trade the chart, not the news.
— Jake Morrison

This is my entire approach in a nutshell. It's simple, it's clean, and it keeps me from getting wrecked by headlines. So, am I missing the bigger picture here, or is price action truly the only truth that matters on the screen?

SPY Chart
SPY chart · Powered by Finviz

52
5Comments