Stocks To Trade
Nov. 30, 20235 min read

3 Steps To Master The Dip and Rip

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Written by Tim Bohen

After the incredible week we’ve had in low float stock land — there’s one pattern I think every trader should focus on until this momentum dies… 

I’ll break it down for you today.

Including what to look for, which entries to consider, and how to set goals for your trades.

This is crucial information as we head into a new trading week. 

Get ready for all the opportunities with my top pattern for low-float runners… 

Or you can just use AI to find top trade ideas with full trading plans — see how it works today at 3 p.m. Eastern

3 Steps To Master The Dip and Rip

My number one pattern for day-one low float spikers is the dip and rip. 

Waiting for this pattern to play out gives the stock time to prove that it can hold its gains and has enough momentum to go higher. 

I think that makes it a high-odds setup that you can rinse and repeat… 

And with all the low-float runners in this market — learn it now!

What The Dip and Rip Looks Like

Pattern recognition is crucial for day traders. But anyone can look at a chart after the fact and see a pattern. 

The key is to learn how to spot it playing out before it makes a move. 

That way you’re prepared with your trade plan before you get in. And when your signal is hit, you execute and follow the plan. 

Here’s what we like to see for a potential dip and rip… 

It starts with a stock that’s a box checker in premarket and having a big upward move … Then right before the market opens, and a few minutes after it opens, we want the stock to pull back.  

We want to see weak price action to lure in the short sellers

But instead of the stock completely breaking down and failing, we want to see it form a base or support level. 

Then we want it to rip past the premarket high and continue higher. 

It looks like this…

VVOS chart: November 29, 5-minute candle — courtesy of StocksToTrade.com

CDIO chart: November 7, 5-minute candle — courtesy of StocksToTrade.com

Entries for the Dip and Rip 

One crucial piece of advice for trading the dip and rip is to not anticipate the move. We don’t buy the dip and hope it rips… 

Too many of these stocks can test the highs and then fail quickly. 

That’s why we wait for confirmation it can go higher. 

And for me, that comes when the stock breaks the premarket high. 

That’s the ideal entry point for this pattern. 

And depending on how much range the stock has and your risk tolerance, you can either use VWAP or the low of day as your risk. 

How to Set Profitable Exit Goals 

Once a stock is creeping up towards the premarket high and looks like it has the potential to play out a dip and rip — you can make your trading plan

The stock has already made its morning low and you know the premarket high level. 

So you have two components of your trade plan — your entry and your risk level. 

Now you just need to set a goal for your trade… 

I like to plan my trades with three-to-one risk/reward. That means for every 10 cents I risk, I want to make 30 cents. 

If I risked 50 cents per share I would aim to make $1.50 per share. 

Learn more about risk management here

Now you know how to recognize a dip and rip while it’s setting up, which level to use as your entry and risk, and how to set goals for your trade. 

Once you have the components of your trade plan ready to go, you can execute your trade — but only if the buy signal is hit. 

Remember, we don’t anticipate moves with these shady stocks. 

Wait for confirmation of the rip before entering and stick to your trade plan. 

Learn the patterns and stocks I’m watching every morning in Pre-Market Prep.

See how you can join here.   

Have a great day everyone. See you back here tomorrow. 

Tim Bohen

Lead Trainer, StocksToTrade