I always say premarket trading is aggressive — that doesn’t mean you shouldn’t trade during that time…
Especially if things are going well for you, you’re on a roll and you see a big premarket gainer with news and volume…
And then you see it setting up for a potential entry with an extra catalyst that could send it higher.
That’s exactly what we saw in premarket yesterday.
So today I’ll break down the pattern I saw setting up and the extra push that came in to spike the stock higher.
But remember the crucial rule for trading premarket runners…
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Two Rules to Trading In Premarket
Of course, BioCardia, Inc. (NASDAQ: BCDA) was on my radar during Pre-Market Prep yesterday morning…
It was a big gainer, it had news, and it was near a crucial whole dollar level…
At around 8 a.m. Eastern I told members that it was a potential buy in pre, sell in pre setup.
It had a big spike, then pulled back and consolidated, so it was a watch for a re break above $1.
You’ve probably heard me talk about the importance of penny stocks breaking $1…
It’s similar to a large-cap stock breaking $100 … Both moves over a big round number can often lead to more upside and an upward trend.
But in premarket, we stick to the buy in pre, sell in pre rule.
The market open is the most volatile time for stocks, so we don’t want to hold through that chaos.
If you’re taking the aggressive move to buy in pre, sell before the open.
That gives the stock time to let the volatility shake out, then you can look for another entry.
But another thing happened with BCDA that made following the buy in pre, sell in pre rule even more important…
BCDA became a chat pump.
Normally when something changes like news of a chat pump hits a stock, I reassess my trading plan…
But in this case, the plan stayed the same. Because the plan was already to sell in premarket…
And what do we say about premarket runners that are chat pumps?
Nine out of 10 fail at the open.
That’s why we don’t risk holding into the open.
The plan worked and the rules kept us safe from a losing trade after the open…
BCDA chart: 1-day, 5-minute candle — courtesy of StocksToTrade.com
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Have a great day everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade