I Dare You to Trade These Stocks

There is a certain type of stock that can offer some of the most explosive trading opportunities in the market…

And no, I’m not even talking about penny stocks here.

The potential for these tickers is massive…

And speaking of awesome gains, if you haven’t tried my Monday setup, you’re missing out on some amazing opportunities.

We’re talking about price moves that can deliver more in one morning than most people see in a month!

And for a limited time, we’re offering the Monday setup for just $7! 

That’s an 85% discount off the regular price.

This sale won’t last forever…

So, check out this pattern ASAP in my video tutorial below. 

The stocks I’m going to talk about today can reward you handomely…

But keep in mind, they can also be dangerous traps for undisciplined traders who dive in without a plan.

First, What Is an IPO?

I’ll go over the basics for those of you who aren’t so familiar with these types of securities… For others, it’ll be a refresher.

An Initial Public Offering (IPO) happens when a private company decides to go public by offering shares to everyday investors.

Before this moment, the company is privately held, typically owned by founders, early employees, and VC firms. 

But when they need a big capital boost, whether it’s for expansion, debt payoff, or new projects, they open the door to public money.

The IPO is the company’s way of raising cash by selling ownership in the form of shares.

Behind the Scenes: How the IPO Process Works

Here’s the simplified version of what goes on behind every IPO:

1. SEC Filing:

The company files detailed financials, risks, and plans with the SEC. This includes the prospectus, the core document investors use to evaluate the opportunity.

2. Valuation & Pricing:

Investment banks partner with the company to determine a fair IPO price based on projected demand and company valuation.

This is tricky because if they overprice it, they’ll lose buyers…

But if they underprice it, they could end up leaving money on the table.

3. The Market Debut:

Once the IPO launches, shares begin trading on a public exchange. 

This is when the madness often begins…

How Do You Trade IPOs?

We had a real-life IPO situation on June 5th, and I’m going to walk you through the two ways traders could have played it. This is how most smart traders approach IPOs.

There are two main strategies I recommend, which are also how most smart traders approach IPOs:

Circle Internet Group (NYSE: CRCL) issued its first shares last week, and it was a huge success…

This IPO was 10x oversubscribed, which is an enormous level of demand that set the stage for a breakout. 

The original IPO pricing was in the low $30s, but it opened at $64, essentially doubling right out of the gate.

That kind of action is a reflection of just how bullish the market is right now, and how much demand there was for CRCL from the start.

Strategy #1: The RCT (Red Candle Theory)

I only use the RCT pattern for IPOs that go straight vertical, like CRCL did.

Here’s how it works:

• CRCL was priced around $30 but opened trading in the $60s.
  
  
• That first print is important. Even though the public never saw it in the 30s, that pricing sets the psychological baseline.
  
  
• CRCL ran from around $60 to around $90 with no pullbacks on the 5-minute chart. That’s a textbook vertical move.
  
  
• Around $90, it formed a red candle, followed by a short pullback.
  
  
• When it broke the top of that red candle around 1:30 PM, it spiked again, pushing toward $100.

Remember, the RCT only applies to vertical IPOs that gap and surge out of the gate. If it fades or opens weak, don’t use the RCT setup.

Here’s the price action of CRCL on IPO day:

Strategy #2: The Safer IPO Play 

This is the Day-One High Breakout, and it’s my favorite approach for IPOs.

It’s the one I recommend for most traders, especially newer ones.

Here’s the setup:

• Wait for the break of the Day One high, typically on Day Two or later.
  
  
• Why is this important? 

Because multiple bullish catalysts align:

1. Shorts from day one get squeezed: Yes, IPOs can be shorted on Day One, but only with exclusive brokers. Most retail traders can’t do it, but institutional investors can. If they’re trapped, they have to cover.
   
   
2. Buyers add to winners: Those who bought on Day One are up on their positions, and many will add as the stock confirms strength.
   
   
3. Latecomers jump in: Traders who missed the move on Day One see the breakout and pile in, fueling volume and momentum.

With CRCL, the Day One high was taken out at the next market open, triggering a strong breakout that ran the stock to $120+.

I consider this the safest way to trade IPOs because you’re not guessing. 

You’re waiting for confirmation, volume, and clear price action.

Here’s what CRCL did on Day Two:

My Final Thoughts…

IPOs bring excitement, but they also bring risk. Focus on strategy, not hype, and always confirm with volume and trend. 

The Red Candle Theory (RCT) is great, but it only applies to IPOs that gap up and go straight vertical.

The Day One High Breakout is your bread-and-butter play…And it can happen on Day Two, Day Three, or even later. 

Watch the resistance levels and watch the volume. When it breaks, you’ve got a high-conviction entry.

And as always, keep an eye on the following emotional trading of others:

• Shorts panicking
  
  
• Early buyers adding
  
  
• FOMO traders jumping in

CRCL checked every one of those boxes, and that’s why it delivered.

Study these approaches, practice them, and memorize them…

Follow the plan, and odds are, IPO trading will deliver for you, too. 

Have a great day, everyone. 

See you back here tomorrow. 

 

Tim Bohen

Lead Trainer, StocksToTrade

 

P.S.

 

• If you love day trading, you need to embrace volatility. 
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