As the market continues its bipolar behavior, I urge you to concentrate on day trades.
They’re one of the best forms of protection against the unpredictable moves of the major indices.
And as always, we have plenty of setups every morning. The key is to focus on the highest-quality, highest-probability patterns.
To see what I’m talking about firsthand, join me every morning at 8:30 am ET for Pre-Market Prep.
I go over all the setups on my radar and how you should trade them, all before the market opens.
To access Pre-Market Prep, join my Daily Income Trader System today.
In addition to Pre-Market Prep, you’ll get three other daily webinars, Oracle, trade alerts, and much more…
Master your trading game with Daily Income Trader.
Recently, a certain sector of the day trading arena has caught fire…
And like I told my StocksToTrade Advisory members earlier this week, it’s time to pay attention to these stocks.
Table of Contents
Let’s Talk About IPOs
For some this may be a refresher, but if IPOs are new to you, here’s an explainer…
IPO stands for “Initial Public Offering.”
Basically, this is when a private company decides it’s time to level up. They want to raise more capital, hire more people, expand overseas, maybe build a few factories.
Instead of going to the bank, calling up a family member, or finding another private investor, they go to the public markets.
That’s when they list shares on a stock exchange and offer equity to people like you and me — everyday traders and investors.
You’re essentially buying a tiny piece of that company, believing it’ll grow and increase in value over time.
Why IPOs Are So Hot (and So Hyped)
Now you know what they are, let’s talk about why IPOs can be such killer trading opportunities.
People get excited about “the next big thing.”
It happened during the dot-com bubble. It happened again in 2018 and 2019. And it’s happening again now that we’re in the “Golden Age of Opportunity.”
But Many Traders Get It Wrong
This is the part that separates the pros from the suckers…
Many people just buy an IPO on the first day it trades because everyone’s talking about it.
You know how I always rant about traders chasing after the next shiny object?
This is a perfect example of that.
I’ll tell you right now, 99% of the time, that’s the wrong move.
In fact, sometimes, even Day 2 is a bad idea.
You want to wait. Be patient. Let the chart tell you what’s happening.
Sound familiar?
So When Should You Trade an IPO?
I’m a chart-based trader.
I always have been and always will be.
And if you’re serious about short-term trading, you need to be one too.
Here’s what you should do:
- Let the IPO breathe.
- Watch how it trades the first few days or even weeks.
- Most IPOs spike and crash out on the first day, or gap up/down unpredictably.
- You’re looking for consolidation and a base to form.
- Once it starts grinding higher, it’s go-time.
Look at Webull Corporation (NASDAQ: BULL). Its IPO last Friday was pretty disappointing…
But the weekend passed, Monday came along, and Boom! An almost 200%* move in one day!
BULL 5-Day, 5-Minute Candles Chart; SteadyTrade
If you look at the BULL chart you’ll see why I like these for day trades only. It has steadily pulled back after hitting that high of $79.56 per share. That’s normal behavior for IPOs.
The first step to spotting and tracking IPOs is to have a great trading platform that includes real-time data, charting, technical indicators, and more.
My top pick is StocksToTrade. It has everything you need to stay ahead of the game.
And right now, you can 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
My Final Thoughts…
IPOs can be amazing trading opportunities, but patience is a must.
Let the chart shape up. Wait for that trend to form. Don’t go chasing.
Instead, wait for the setup, track the volume, and get price confirmation.
Don’t fall for the mania. Don’t trade on emotion.
As always with day trades, execute based on technicals and timing.
Have a great day, everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade
P.S.
Looking for more day trade setups?
Monday morning gives us a window of opportunity that doesn’t exist at any other time during the week.
The Monday setup has brought 100%+ gains…in just one day!*
I’ve studied and perfected this trade, and now I want to share it with you.
Learn it for yourself in my video tutorial below:
