Fade the spike trading strategy: how to trade against the news move and win
Most traders chase the spike after a news release. The fade the spike trading strategy does the opposite it bets that the initial move is an overreaction and that price will reverse once the market recalibrates. When conditions align, it is one of the cleanest setups in news trading. Why spikes reverse After a major economic release, algorithms reprice assets instantly often pushing price far beyond fair value in the first 60 seconds. Once that momentum exhausts itself, rational traders step in and price snaps back. Understanding this mechanic is essential. For a full breakdown of how liquidity grabs and stop hunts drive these spike moves, read the guide on high impact news trading. The 3 conditions you need before entering Extreme spike : Price has moved well beyond the recent range not just a normal post-news push. The overextension must be obvious. Liquidity sweep: The spike has visibly run through a key support or resistance level, trigger...