Jesse Rogers presents a short trading method called the "first candle rule" that uses the opening five-minute candle (9:30–9:35am EST) as a daily roadmap. The method: mark that candle's high and low, switch to a 1-minute chart and wait for a break confirmed by a fair value gap, then enter when a retest of the gap is followed by an engulfing candle. Stop is placed one tick below the low and the target is a fixed 3:1 risk-to-reward.
The first five minutes of the trading day have more volume than any other 5 minute period of the day. Yet most traders completely ignore this one candle because they're too busy looking at multiple time frames, forcing complexity. And in result, they blow accounts in that process. Meanwhile, this one candle gives you everything that you need to stop doing that. It gives you the exact direction the entry and the target. Here is how it works. It's called the first candle rule and it does this in three simple steps. First. First mark the high and the low of the five minute candle that forms between 9:30 and 9:35am EST or New York Standard Time. These two levels become your entire trading roadmap for the day. Step two, drop down to the one minute chart and wait for a break. Now, to confirm a real break, we need a specific type of behavior. And no, it's not a candle closure and it's definitely not just a wick. What we're looking for is a fair value gap. This shows us whether buyers or sellers are in control and we want to be on the right side of the market. Once this happens, we move to step number three, which is our trade entry. First, we're going to wait for price to dig into the fair value gap, but we're not going to enter just yet. We are waiting for one confirmation to filter out the losing trades. And that confirmation is an engulfing candle. Once the retest candle that traded into the fair value gap is engulfed, there is our entry. We place our stop one tick below the low and we target a fixed three to one risk to reward. Now, I want you to save this so you can study this strategy whenever it comes time to trade.
