Stop Saying “Should”: A Process-First Playbook for Trading Headline Volatility

Bob Iaccino, Chief Market Strategist and Co-Founder of Path Trading Partners, joins us live every Thursday from 9 AM ET, as our risk management educator.

With 30 years' experience working as an active investor in equities, commodities, futures and FX, there are few better to talk on the subject of trading strategies.

Bob has developed a method for breaking down his key fundamentals of risk management in a way that he believes retail traders can understand and use to get actionable insights to bring into their own trading.




I woke up to one of those mornings where the market feels like it is moving faster than your brain wants to process it. A headline hits, futures react, cash opens, and suddenly you have a sharp intraday drop that lights up every notification and every emotional reflex a trader has.

That is usually when traders reach for two things:

1. A reason.
2. A trade.

And most of the damage gets done right there.

Let’s put a stake in the ground: a one to two percent intraday move is not inherently abnormal. It feels dramatic if you are watching candle by candle, but the market has produced moves like that many, many times across modern history. If you define “crazy” as “unusual,” then you need to reserve that word for truly exceptional conditions.

What matters is not whether the move feels intense. What matters is whether you are prepared to execute your process while it is happening.

Most people are not.

They start narrating, they start guessing, and they start trading the story instead of trading a plan.

When a market drops quickly after a political or policy headline, the first thing traders ask is, “Why is this happening?”

Here is the issue: “Why” rarely translates into something you can trade with precision.

Even if you believe you understand the headline, you still cannot quantify what it should do to price. You cannot reliably answer questions like:

• How much downside is rational?
• When is the move “overdone”?
• How long should the reaction last?
• Which price levels should matter if the headline is reversed later in the day?

I have been doing this for decades. I still cannot convert a headline into a reliable, tradable magnitude.

That is why I do not build trades around “why.” I build trades around repeatable conditions that I have tested, defined, and can execute without improvising.

If I could remove one word from traders’ vocabulary, it would be “should.”

• The market should bounce.
• I should have bought more.
• I should have seen that resistance.
• I should not have taken that trade.
• I should have held longer.
• I should have exited earlier.

The word “should” is the language of hindsight. It is the shortcut into emotional decision-making because it reframes trading as a morality play instead of a probabilistic process.

If you win, “should” becomes FOMO. If you lose, “should” becomes regret.

Neither improves execution. Both erode it.

A key reality check here is that perfect trading basically does not exist. I can count the number of times I have bought the low and sold the high on one hand. The goal is not perfection. The goal is repeatable decision quality with controlled risk.

If you rush into a trade and it loses, that obviously feels like a mistake.

But if you rush into a trade and it wins, that is still a mistake.

A good outcome does not validate a bad process. It only rewards it temporarily. Over time, poor process gets punished, because the market eventually gives you the exact same setup where the outcome is different, and you have no framework to protect yourself.

Process is the only thing that scales.

I do not prepare for the specific surprise. I prepare for the fact that surprises exist.

You cannot forecast every unexpected move. You cannot identify every future headline that will hit at the worst possible moment. What you can do is ensure your strategies have been stress-tested across market environments that include shocks, gaps, and disorderly sessions.

That is the real preparation:

• Define the setup criteria.
• Define the trigger.
• Define the invalidation.
• Define the stop logic.
• Define the target logic.
• Define position sizing based on the distance to the stop.
• Define what you do if the market gaps through your level.

If you have done that work, a volatile day is not a special day. It is simply another day contained inside the distribution of your strategy.

In a recent live session broadcast by Tradezero, we walked through a short-term reversal pattern on a very low timeframe chart. It is a useful teaching moment because it highlights where traders tend to fall apart: when something almost reaches a target, or almost breaks a level, and then turns.

That is where you hear:

• “It should have hit my target.”
• “It should have broken out.”
• “It should have held support.”

This is why I emphasize designing targets that are easier to reach and stops that are harder to reach. Many traders unknowingly do the opposite.

They set ambitious targets and tight stops, then they spend their day getting chopped up and emotionally exhausted.

If you are going to trade very short-term reversal patterns, you need to accept a few realities:

1. The pattern is not “real” until it is confirmed.
2. A trigger without a defined invalidation is just a hope.
3. The shorter the timeframe, the more noise you have to endure.
4. Your stop and size matter more than your opinion.
   

Here is what I want traders to focus on structurally:

Trigger: What level must price trade above (or close above) for the pattern to be valid?

Invalidation: What price level proves the pattern is wrong?

Stop placement: Is your stop placed where the setup is wrong, or merely where you feel uncomfortable?

Target logic: Are you aiming for the maximum theoretical projection, or a realistic, high-probability target?

The key point is that you do not “trade the pattern.” You trade the rules you have defined for how that pattern behaves.

Many traders use textbook projections that extend the full height of the pattern. That is common. It can work. But it also creates a predictable psychological trap: the market often gets close, then stalls, then reverses. That is where the “should” starts.

In my work, I prefer targets that are realistically attainable, with a structure that supports taking profits without needing perfection. If you choose a conservative target, you reduce the number of trades where you get to say, “It missed by a few cents.”

That is not just a comfort preference. It can materially improve execution consistency because it keeps you out of the cycle of moving targets, moving stops, and turning a clean setup into an emotional negotiation.

If your trade plan says your target is X, and price gets close but does not print it, you do not revise the plan after the fact. You review it later.

Professional behavior looks like this:

• You execute the trade as planned.
• You record what happened.
• You evaluate whether your target logic should change in future trades.
• You do not adjust mid-trade based on irritation.

That last piece matters more than most traders realize. Irritation is an edge-destroyer. It pushes you into “just this once” decisions that become habits.

When you get an abrupt move driven by a headline, this is the checklist I want traders to run:

1. Am I trading a setup I already understand, or am I improvising?
2. Do I have a defined trigger, stop, and target?
3. Is my position size based on the distance to the stop?
4. Is this timeframe appropriate for my temperament and skill set?
5. If this trade loses, will I still be satisfied that I followed my process?
6. If this trade wins, did I still follow my process, or did I chase?

If you cannot answer those questions quickly and clearly, you are not ready to trade the move.

We also discussed the temptation to jump from short-term chaos into long-term narratives. This is where traders start hunting for “the next big thing,” usually by focusing on popular themes and the most obvious beneficiaries.

The more durable approach is to think in “picks and shovels.”

For example, if a major technology trend increases demand for computing capacity, you can reasonably infer that it may also increase demand for power generation, grid infrastructure, industrial components, thermal management, and other enabling systems. That does not mean any specific stock is a buy. It means you have a category where you can screen for charts that are forming constructive bases or bottoming structures, and then apply a defined process to entries and risk.

That is how you avoid the trap of making a narrative your trading plan.

Headline volatility is not an invitation to prove how fast you can react.

It is a test of whether you can execute without improvising.

If you want to improve quickly, stop trying to predict what the market “should” do. Build a process that tells you what you will do, what proves you wrong, and how much you will risk when you are wrong.

That is how you trade markets without negotiating with yourself after every candle.

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