Pre Hit Trade Example

When I first started trading I had a hard time correlating what I was reading and learning with what I was seeing on charts. This is an attempt to show you what I saw as it was happening. The chart setup I use the most is 3 minute bars, so that is what I have illustrated this trade with.

Muddy preaches about the pre hits (stocks that are up in premarket trading)... CCTYQ was a double pre hit (pre hit 2 days in a row). I don't know whether that makes it better or not but it worked this time. So before market open in the morning, I was watching it, waiting to buy on a sign of strength. I jumped in at .36 as soon as I saw activity. Look at the VOLUME on the gap up!










It spiked up more, then started to go down, but never went RED. I was ready to sell if it went red, but it didn't, and continued to a high of 0.47










It went into sideways action for the next while, until volume started picking up again, with decreasing price - as you can see below. This is when I sold at 0.43 for a gain of 19%. I sold because of DECREASING price on INCREASING volume. Additionally, it broke the previous low of 0.435 that it had made after its high of 0.47










It continued down to a low of 0.33 - after I was long gone.










I hope this helps some of you understand what to look for if you watch charts. The charting software I'm using is TD Ameritrade's StrategyDesk.
Please leave any questions or comments, as well as suggestions about things you think would aid in understanding.