Happy Monday, traders…
Ben here.
Tell me if this has ever happened to you:
You plan a trade, execute it, and feel great about your setup. For the first half of the day, it’s moving just as expected, heading towards your first scale…
Then, just before that profit-taking level, some unexpected headline hits the wires and completely wrecks your position.
Sound familiar? This is happening to a lot of traders this week…
If you aren’t closely watching the news cycle right now, you’re trading with blinders on.
Over the past few weeks, news headlines have been driving the stock market as domestic policy shifts and global tech disruptions have taken center stage.
Look at the recent DeepSeek selloff. One story sent shockwaves through the tech sector. Even companies loosely tied to AI got dragged down with it.
On the domestic front, Trump’s second term has put policy uncertainty back in focus. Tariff talk, deregulation debates, and new proposals are already starting to stir volatility in key sectors.
This isn’t the time to trade solely based on charts and options volume. Sure, those are crucial, but you need to combine them with the news. One solitary headline can move hundreds of billions in this environment.
With that in mind, let me show you how to trade a news-driven market…
An Extra News-Driven Market
The stock market is always reacting to the news, nothing new there.
But with Fed policy in focus, a new administration in the White House, and a huge shock in tech stocks — it’s now in a period of being especially news-driven. News-dominated, if you will.
Stories that might move the major indexes +/- 0.5% in a normal tape are causing enormous 2-3% swings in this one.
Traders aren’t just reacting to what’s happening — they’re reacting to what they think could happen next.
Trump 2.0 has already created volatility in areas like industrials and energy. Any suggestion of tariff policies or deregulation can shift market sentiment in minutes.
Globally, the DeepSeek drama is still creating ripples. Doubts about the future of AI CapEx spending have thrown a wrench into the tech sector.
Stocks are swinging wildly, with moves of 10% or more happening in a single session on trillion-dollar market caps.
These conditions reward traders who are keenly tuned into the news cycle, and punish those who aren’t paying attention…
3 Rules for Trading a News-Driven Market
1. Stay Informed, But Selective
It’s not rocket science. When the market is news-driven, you need to watch the news while trading…
It may sound obvious, but simply having CNBC or a 24-hour news station on one of your secondary monitors while trading can help you make actionable moves as soon as the story drops.
For example: On January 21, when Trump announced a $100 billion investment in the StarGate initiative to be led by Oracle Corp. (NYSE: ORCL), one of our SPYDER moderators, Ryan, immediately bought 1/24 $180 calls (when the stock was trading for $170).
The next day, Oracle opened at $189 (+11%), and Ryan sold his contracts for a staggering 1400% gain in less than 24 hours.
But if he hadn’t had the news on one of his screens, he never would’ve made that trade at the perfect moment…
That said, not every headline requires action. Overreacting to every piece of news is just as dangerous as ignoring it altogether.
You have to learn what news matters and what news doesn’t. Sort the signal from the noise. Focus on stories with real market-moving potential, such as:
- Changes in domestic policy, like tariffs or tax incentives.
- Geopolitical events impacting trade or supply chains.
- Developments in major companies or sectors, like the DeepSeek situation.
StocksToTrade Breaking News Chat can help keep you up-to-date on the biggest market catalysts BEFORE the news guys hear about it…
Launch your trading with BreakingNews Chat + StocksToTrade — Get your 14-day trial for just $7!
2. Trade the Reaction, Not the Headline
When news breaks, the market often reacts emotionally before settling into a rational price.
If you can keep a level head and stay patient through the initial reaction, you can take advantage of these exaggerated moves.
A sharp drop on negative news could be a buying opportunity, just as a sudden spike might be a chance to exit…
But don’t chase these big swings until you see the chart flattening out, consolidating for the next big move.
Let the over-exaggeration work in your favor. Wait for the dust to settle and skate to where the puck is going, so to speak.
3. Trade Shorter Time Frames
In a news-driven market, the narrative can change in the blink of an eye…
Just look at Nvidia Corporation (NASDAQ: NVDA) last week — down 17% on Monday and up 8% on Tuesday.
To avoid getting caught in an immediate reversal, trade shorter time frames and quicker expiration dates.
Setups that can play out in a few days — or even a few hours — are often the safest bet when the news cycle is moving fast.
This doesn’t mean you can’t put any swing trades on. But it means you need to be very selective with them.
Trading in a news-driven market isn’t for the faint of heart. It demands focus, quick decision-making, and the ability to adapt to constantly changing information.
But these conditions also bring opportunity. Volatility means movement, and movement is where we make our money as options traders.
Watch the news closely, but don’t let it overwhelm you. The traders who keep their cool and capitalize on the meaningful “signals” will come out on top.
Before we go, let’s look at:
💰The Biggest Smart Money Bets of the Day💰
- $2.6 million bullish bet on WMB 02/21/2025 $55 calls @ $2.85 avg. (seen on 1/31)
- $2.3 million bullish bet on JD 03/21/2025 $42 calls @ $3.15 avg. (seen on 1/31)
- $1.7 million bullish bet on DECK 03/21/2025 $200 calls @ $3.61 avg. (seen on 1/31)
Happy trading,
Ben Sturgill
P.S. Earnings season is here — and this one could be your biggest trading opportunity yet…
Join me TODAY, February 3 at 12:00 p.m. EST for an URGENT Earnings Edge Workshop to see where the Smart Money traders are placing their bets.
We’ve had 100 winning trades in a row* in Earnings Edge — don’t miss the next 100.
Click here now to reserve your spot!
*Past performance does not indicate future results
