Let’s review a rule I teach new traders because I get questions all the time.
This is a rule that forces you to do nothing, while everyone else is going crazy because the opening bell sets them off like one of Pavlov’s dogs.
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The Big Picture
Now, a lot of new traders hate this rule. That is, until they learn to love it. Before I get to it, let me remind you of why we have rules in the first place. All the rules I teach are meant to keep you safe.
And they’re not just random rules. I have the Chasers Anonymous t-shirt to prove it. There’s probably a Bagholder Elite shirt buried somewhere around here, too.
In all seriousness, this rule saves a lot of new traders from destroying an entire month’s progress in one trade.
What is it?
The 9:45 Rule
Now, I know some of you already know this. But it’s worth reviewing.
Using the 9:45 rule, we avoid trading for the first 15 minutes after the market opens.
Does this mean you shouldn’t trade premarket? I used to tell new traders to avoid premarket trading. Now, I’m open to it if the pattern fits. In fact, if you want to trade premarket or after-hours, the RCT pattern is my top recommendation.
I’m not completely adverse to trading at the open if you are a more experienced trader with a lot of trades under your belt and a clear understanding of the risks.
But if you’re new or you get stopped out at the open a lot, just avoid it.
What About Premarket Press Releases?
One reason new traders get sucked into trading at the open is because so many companies play the press release game so well.
How? 8:30 a.m. press releases. Sometimes they drop earlier. But for best effect, companies wait until 8:30 a.m. because by then, most traders are at their desks prepping for the market open.
You can almost hear the alerts going off on desks around the country…
Here’s a low float stock with some buzzword press release, and the stock spikes $2 a share in five minutes.
Nobody even had time to read that press release. They see a headline, see that the stock is a low float former runner, and execute a FOMO buy.
Now, that could work. You could get lucky. But I don’t think you have good odds.
Instead of just buying on a headline, take a reasonable approach:
- Wait for the stock to set up
- Get prepared
- Look for key levels
- Get your orders ready
- And THEN look to execute the trade
So, what does this have to do with the 9:45 rule?
The reality is, a lot of these premarket spikers fail. Nine out of ten chat pumps fail. But even headline-driven spikers often fail at the open when short sellers pile on.
Use the 9:45 Rule for Confirmation
With the 9:45 rule, you’re not playing guessing games. By 9:45, you know if it’s a potential trade or something to walk away from.
My Take
Remember that these stocks are not investments. You’re not going to put them in your IRA. You’re not going to gift 1,000 shares to your kid, because by the time he’s 18 it’ll be worth 10 cents, if not delisted.
These stocks are short-term trades we can use to grow our accounts. If you can play defense, not get stuck, and not get FOMOd into following a chat pump…
Guess what?
You’re NOT down $1, $2, or $3 a share.
Watchlist
Let’s look at a stock we were watching in PreMarket Prep on Thursday (July 2) to demonstrate the 9:45 rule in action.
CaliberCos Inc. (NASDAQ: CWD) dropped a buzzword headline press release. Here’s what happened…
CWD 7/2/26 premarket to 11 a.m. ET
CWD made a solid premarket move before selling off for the first 15 minutes after the open.
So, was CWD a good trade opportunity at the open? Anyone who buys there is more likely to be a bagholder than grow their account. Pull up the chart now and you decide.
On My Radar
- It’s not just stonks and crypto: egg prices get manipulated, too
- Just when you thought you’d seen it all, welcome to the Summer of Ludd.
- Meanwhile, Higgins crunches trading data, cranks out my workouts, lets me know when I need more sleep, when to walk faster, and reminds me to write this newsletter.