How to Use Pre-Market Actions to Make Day Trading Decisions

Last week, I traded a total of 4 stocks, resulting in a 4.66% gain. If you want to see all the trades in details, you should definitely check out (and follow) my Twitter to view the trading log.
Today, I just want to focus on one particular trade that I took on October 28th. It was on $XNET and it was one of the best trades I have had this year; Not from a P&L perspective, but from a disciplinary standpoint. Also, I believe it was an excellent trade to demonstrate how you could use pre-market actions to help you make trading decisions throughout the day.
The Pre-Market Session

On November 28th, $XNET was one of the leading gappers in the pre-market as it continued to feed off its momentum from the previous trading day. In fact, the chart was absolutely beautiful prior to the opening bell at 9:30 am. Specifically, rectangle 1 highlights the picture-perfect flag pattern. This suggested that the stock would likely move higher if it was able to break above its sideway consolidation.
Patience, Patience, Patience

However, once the bell rang, the stock quickly sold off. This was likely due to some profit taking given the run it had the previous day. With that said, I still didn’t give up on the stock, because I really liked the move it had during the pre-market session.
I was paying close attention to the $5.80 level (indicated by rectangle 1), because it was clear that that was where the resistance was. In addition, breaking above that level would also mean climbing above the 9 EMA once again.
Lucky me. In the end, my patience did pay off. I got in shortly after the price went above the 9 EMA and rode it up until $6.22. To be honest, $XNET was an easy stock to trade that day, with many great opportunities to enter for the long side. For example, rectangle 2 and rectangle 3 represented great entry signals with their clean flag patterns.
By now, I hope you see the value of looking at the pre-market actions. In most cases, it can really help you filter out the noises and volatility that you normally see right out of the opening gate.
Again, if you want to be up to date with all my trades, be sure to follow me on Twitter.
Disclaimer: The presented content is for educational purposes only as I am not registered as an investment advisor. Please consult a qualified financial advisor before making personal investments of any kind. Past performance is not a guarantee of future results.
