First spike

The first spike is the violent initial move that follows a data release, a headline, or a break of an obvious level. It is driven by fast automated orders and by stop losses being triggered, not by considered decisions.

Two things make it treacherous. Liquidity thins out, so the spread widens and orders can fill far from the price on the screen. And the move frequently reverses: the spike takes out the orders sitting beyond the level and then price returns, leaving the traders who joined at the extreme in a loss immediately.

What comes after the spike is more informative. If price consolidates above the spike high rather than falling back through it, the move has support beyond the initial burst.

The first spike is where beginners get the worst entry price and the widest spread on the same trade. Recognising it as a moment to observe rather than act protects the account more than any indicator.

• Treat the spike as information, not as an entry signal.
• Expect a wider spread and possible slippage during it.
• Watch whether price holds beyond the spike before considering a trade.
• A spike that fully retraces is a warning, not an invitation.

Educational guidance only — never a trading signal or recommendation.