What an amazing finish to Q2!
The S&P 500 and the Nasdaq both closed out the second quarter with fresh all-time highs on Friday…
Check out this headline on Monday from The Wall Street Journal:
All of that is great…
But whether the market’s going up, down, or chopping sideways, there’s always an opportunity for smart day traders.
Nearly every morning, I’m staring down a list of trade setups longer than a holiday grocery run…
And I wouldn’t have it any other way!
Speaking of trading opportunities, do you realize the gains you can make while you’re asleep?
Most people don’t… Except for my colleague and expert trader, Tim Sykes!
Tim has discovered a “loophole” in an overlooked corner of the market, and it opens only AFTER MIDNIGHT…
And he’s made thousands of dollars in overnight profits!
Unfortunately, due to new NASDAQ trading rules, this loophole is going away soon…
But Tim is sharing it with you right now! Even better, in honor of July 4th, he’s offering it for just $1!
Learn about the Midnight Trade in his video below ASAP!
With all of the morning setups waiting for us, the market open is the perfect time to make some real gains, and fast…
The first 30 minutes after the bell offer some of the most explosive moments in the entire trading day.
But many traders get chewed up and spit out… Unless you know what you’re doing.
The open is exciting, fast-paced, and full of potential, but it’s also packed with risk.
And if you’re a newer trader, the open can eat you alive if you’re not prepared.
So today, I’ll show you how to trade the market open safely and effectively…
And more importantly, how to know when to stay the heck out.
Table of Contents
The Open: Opportunity and Danger
Most traders fall into one of two camps:
- Those who lose money at the open because they’re chasing without a plan…
- Or those who avoid it completely because they’ve been burned too many times.
But if you know how to handle the volatility at the open, you can catch massive moves, with discipline.
And that’s where my 9:45 am Rule comes in…
The 9:45 AM Rule
A lot of people ask me why I stress using the 9:45 Rule, but then I still highlight setups to use right at the open.
Simple. There’s a difference between experienced traders and new ones.
Experienced traders understand how fast things can reverse in the first few minutes.
They know they have to move quickly to lock in gains.
They’re prepared for momentum to fade, and don’t hesitate to cut.
But if you’re new, stick to the 9:45 Rule.
Wait, and let the noise settle. You’ll save yourself from a ton of bad entries and emotional trades.
Check out my blog post to learn all about the 9:45 Rule and how to use it.
Why the Open Is So Volatile
The market open is the most active part of the day.
Go back and look at any high-volume trading day…
Odds are the 9:30 am candle will be the biggest one on the chart. That massive inflow of volume creates opportunity, but it also fuels wild swings.
That’s why you need a pre-market checklist.
The Pre-Market Checklist
Before the bell even rings, you should know:
- Your top watchlist tickers
- Key entry levels
- Stop-loss levels
- Profit goals
If you know me, you know I always talk about looking for “box checkers,” stocks that check off multiple key criteria.
Learn the boxes to check here.
The more boxes a stock checks, the better your odds. You’re not guaranteed success, but you’re stacking the deck in your favor.
Key Patterns to Watch at the Open
Once you’ve gone through your checklist, you want to align that with a repeatable pattern.
Here are three of my favorites for the open:
Dip and Rip:
- A pre-market runner pulls back at the open.
- This pullback attracts short sellers who pile in early.
- If the stock then reverses course and breaks the high of the day, the shorts are forced to cover.
- Buyers and shorts rush in, and you see a momentum spike.
Watch the Level 2 data…
When the bids stack up, you’re likely to see a strong move.
By the way, Level 2 only works if you’re using real-time data.
That’s why I rely on the StocksToTrade platform for real-time Level 2.
STT also includes charting, technical indicators, tons of pre-built scanners, alerts, and more…
It has everything you need to stay ahead of the game, all in one place.
Get two weeks of both the STT platform and our Breaking News Chat service for $17.
Grab your 14-day StocksToTrade + Breaking News Chat trial today for only $17.
Gap and Go:
- A stock trends up all day on Day 1.
- It closes strong and then gaps up the next morning.
- It continues higher on strong volume on Day 2.
This is not a one-and-done move. This is a continuation setup, and it has much better odds of follow-through.
VWAP Reclaim:
- A stock spikes at the open, then pulls back.
- It dips under VWAP, consolidates, then reclaims VWAP with volume.
- This shift signals that buyers are back in control.
VWAP is our #1 indicator for gauging sentiment…
Above VWAP is a bullish sign.
Below VWAP is bearish.
Not Ready for the Open?
No problem!
If you can’t manage the volatility, skip it.
Start trading at 9:45 am…
Or wait until 2:00 pm. The afternoon moves are often cleaner and less stressful.
You don’t have to catch the open to be a successful trader.
But if you do want to trade the open, you need a clear plan, a checklist, and the discipline to follow it.
My Final Thoughts…
So, are you a market open trader? Or do you prefer to wait for things to settle?
If you’re tired of getting killed in the first 5 minutes of the day, stick to the 9:45 Rule.
Stick to high-probability setups, follow your checklist, watch the volume, and don’t force anything that doesn’t fit.
The open can be powerful… But only if you trade it with precision.
Trade smart and keep stacking those small wins.
Have a great day, everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade
P.S.
Learn how to spot a hot sector before it’s too late.
If you’re a day trader, you should know everything about this.
Know how to scale into winning trades the right way.