Let’s be real… Fast-moving stocks right at the open can be scary.
They’re volatile, unpredictable, and a lot of traders get chewed up trying to chase them…
Fortunately, the best morning runners often follow repeatable patterns.
One of my favorites of the bunch is the Monday Setup…
If you don’t already know about it, listen up!
Every Monday, the market kicks back into gear after a weekend of rest… And that reset creates a unique opportunity!
Right at 9:30 am Eastern, as the opening bell rings, we look for a very specific setup that often shows up like clockwork.
And it has delivered some incredible wins!
Take yesterday…
BT Brands (NASDAQ: BTBF) gained an incredible 175%* in less than half an hour after announcing it was exploring a new merger opportunity.
These are the kinds of morning spikes we hunt for every Monday!
Want to learn how to spot them for yourself?
Watch the video below for the full trade breakdown and strategy tutorial for my Monday Setup.
Something I say over and over again until I’m blue in the face is, “Chasers always get wrecked.”
Chasing a stock might work 1 out of 100 times…
The other 99 times?
You’re buying at the top and then getting dumped on by profit-takers.
That’s why I love the Dip and Rip (or the DNR)…
It forces you to wait.
You’re not chasing, you’re strategically stalking.
You’re trading like a professional, not an impulsive gambler.
Remember, the market punishes impulsiveness… and rewards patience.
Table of Contents
What Is the Dip and Rip Pattern?
It starts with a big pre-market gainer, often something with a catalyst, low float, and high volume.
These stocks gap up early and get a lot of attention.
But here’s the twist…
When the market opens, you don’t buy immediately.
You wait for that early pullback, the “dip.”
Then, if and when it breaks back above pre-market highs, you’ve got your “rip.”
Step-by-Step: How to Trade It Right
1. Look for Low Float Stocks
We’re talking under 10 million shares. Some traders stretch that to 12 or even 15 million, but the sweet spot is under 10M.
These stocks move fast because there aren’t many shares to go around.
2. Find a Real Catalyst
We want news that matters, like earnings, contract wins, FDA approvals, etc.
Ideally, the news drops in that 7:00–9:00 a.m. window, when traders are watching and volume’s building.
3. Confirm With Unusual Volume
Check the 60-day average volume.
If a stock normally trades 1M shares a day and it’s already traded 3–5M pre-market, that’s a great sign.
That means eyes are on it. Volume is the fuel for the rip.
Where Chasers Get Smoked
Let’s say the stock spikes hard on that catalyst before the open.
What happens at the bell? Most of the time, you’ll see a quick pullback.
This is where most traders blow up. They see the spike, enter the trade because of FOMO, and buy the top…
And minutes later, they’re down big.
That’s chasing to a tee.
Why The Pullback Matters
That early dip does two key things:
It shakes out traders who bought too high and then panic and sell.
It also draws in short sellers who think the move is over and start piling in.
And that’s where the DNR setup starts brewing.
When that stock reclaims its pre-market high, everything changes.
- Breakout traders jump in.
- Shorts start covering their positions (which means buying).
- And even bag-holders sometimes re-enter.
All that action delivers a huge surge in volume, and the true “rip.”
Risk Management 101
- Set your entry point on the breakout.
- Place your stop-loss just below support.
- And aim for at least 3:1 risk-to-reward.
For example, if the stock is trading at $1 per share and your target is $1.60, you would set your stop loss at $0.80. You aim to make $0.60 per share, so you risk $0.20.
When the Setup Fails, Do Nothing
Let’s say the stock spikes early, but then just fades and never reclaims the high.
Great. Do nothing. No trade.
Let the short sellers make their money. You don’t care because you dodged a bullet.
You’re only here for high-quality, repeatable setups, not one-off lotto tickets.
My Final Thoughts…
You don’t have to trade every ticker…
You just have to master a few proven patterns.
And the Dip and Rip is one of the most powerful tools a morning day trader can have.
To recap…
- Focus on low-float stocks
- Look for real catalysts
- Wait for unusual volume
- Let the dip shake ‘em out
- Strike on the breakout
- Manage your risk
- Take your gains
Rinse. Repeat. Improve.
And you’re done, and have won, before most people finish their coffee.
Have a great day, everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade
P.S.
Do you have the right mindset for day trading?
How aggressive are you as a trader?
Cash or margin account… Which is right for you?