Premarket was wild yesterday — there were so many stocks to watch…
True penny stocks, short squeezes, real stocks, multi-day runners, day one runners — stocks were running all over the place!
Mornings like that can be overwhelming, especially if you’re a new trader who’s been trading these wild stocks for less than a few months.
If that sounds like you, I have some advice…
I want to show you one of the best rules you can use to help you avoid entering too early, chasing stocks, or getting chopped out of trades…
This puts you in the position to take advantage of some of the best plays in these volatile penny stocks.
One Rule To Enforce Every Morning
Most prepared traders are at their desks around 8:00 a.m. or 8:30 a.m. Eastern to prepare for the 9:30 a.m. market open.
That’s why these crappy penny stock companies love to push out press releases at 8:30 a.m.
They want to capitalize on maximum FOMO as traders rush to buy the stock as soon as news drops.
That’s why you’ll see these wild premarket moves where a stock can go straight up and put in multiple green candles in a row.
But if you have a process — you’re not one of those traders blindly buying into the news hype…
You’re busy making a plan.
And one of the most crucial rules I can give you to help you make a plan and avoid getting sucked into the FOMO and being left with frustration is — wait until 9:45 a.m. or later to enter a trade.
Let the short sellers have their moment trying to short big runners at the open…
And avoid getting caught in choppy action while a stock consolidates and tries to pick a direction…
Waiting until 9:45 a.m. or later gives you a chance to calm yourself, let the stock chart play out, and then you’re ready to attack with a solid plan.
Wait for the stock to confirm it can go higher before you take an entry…
I talked about looking for confirmation with the red-to-green move in my newsletter yesterday…
And in the morning we had another perfect example of waiting for confirmation before entering Evaxion Biotech A/S (NASDAQ: EVAX)…
EVAX chart: 1-day, 5-minute candle — courtesy of StocksToTrade.com
You don’t have to be aggressive in the premarket. Or buy a stock right at the open.
Wait for 9:45 a.m. or later and look for a pattern like the dip and rip or weak open red to green move.
Using this rule might mean you miss trades…
But waiting for stocks to prove themselves can increase your odds and help you avoid unnecessary losses, and frustration entering stocks too early.
Try it for yourself and see if your trading improves.
Have a great day everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade