I was bad at opening drives. Every

morning it was the same thing. A stock

gaps up on news, the volume looks great,

the bell rings, it starts to move, and

I'd buy the first green candle, get

faded, get stopped out, and then sit

there and watch it run without me five

minutes later. So, I stopped trading

them for a long time. And I went and

pulled 30 of the best opening drives I

could find. I put them side by side and

looked for what they all had in common

before they moved. What I found is that

this setup is a lot simpler than I was

making it. There is one trade here, one,

and it's the break of the pre-market

high. Everything else, the gate, the

filters, the exits, they're just there

to keep you out of the bad versions of

it and get you paid on the good ones.

That's the video. one trigger, four

filters, and three real trades where

you'll watch the same exact model

repeat. So, why do so many traders lose

on this setup? Because they trade the

gap instead of the break. Here's what

that looks like. The stock gaps up on

news, the bell rings, the first candle

is green, and you buy it because it's

moving, and you think that the catalyst

is excellent. You don't want to miss it.

You have FOMO. That is not a setup.

That's a feeling. You have no level, no

trigger, and no idea where you're wrong.

And about 90 seconds later, the stock

rolls over, takes your stop out, and

then turns around and goes without you.

I did that for a while. You know,

sometimes you're right, sometimes you're

wrong. You're basically just trading on

intuition. The fix is boring and it is

the entire trade really. You wait for a

twominute candle to close above the

pre-market high. That's the difference

between the version that works and the

version that stops you out. Not a better

indicator, not a faster entry. You just

wait for the level to actually break and

you let the candle close before you

believe it and put your money at risk.

Because think about what the pre-market

high on an inplay stock really is. It's

the highest price anybody was willing to

pay for that stock all morning while

they had hours to sit there and think

about it, look at the chart, and think

about the catalyst. It's the level every

serious buyer and seller has been

staring at since they got to their desk.

When the stock takes that level out on

volume, that argument is settled. Until

it does, you're guessing and trading

inside of the pre-market range. Before

you go looking for the trigger, there is

a gate. It takes about 3 seconds.

Four numbers. Prior close, where the

stock finished yesterday. Yesterday's

high, the pre-market high, the highest

it traded before the bell, and the

opening price, which is the very first

print at 9:30. The gate is this. The

opening price has to be above

yesterday's high and above the prior

close. both. Not one of those. If it

opens below yesterday's high, this is

not the setup. I don't care how good the

news is, we're not buying it at the

open. And the reason is just supply and

demand. If a stock opens above

yesterday's high, then every single

person who bought it yesterday is green.

There's no short-term buyers sitting

there waiting to get out at break even.

But if it opens below yesterday's high,

you're buying into a crowd of people

that might want their money back. And

those people are exactly who's selling

into your breakout. That takes about 3

seconds and it's going to kill most of

your bad opening drive trades. If it

passes the gate, there's one trigger and

it never changes.

A long entry on a twominute candle

closing above the pre-market high on

volume. Two words in there that are

doing all the work. Closed and volume.

Closed means close. Not touched, not

wicked through. If price pokes above

that level, inch or bar, my finger is

already on the button. But I sit on my

hands

until that candle finishes, completes,

and closes. Most of the fake outs or

what we like to call stuffs you have

experienced in your trade happens in the

middle of a candle as it's forming in

volume. I want a real volume expansion,

three standard deviations above what's

normal for that time of day based off

the last five days. And I've got that

plotted on my volume pane on Thinker

Swim. Or you could use plain old

cumulative arval based on the last 5 or

10 days. It's not going to make too much

of a difference. And the arval must be

over three. Price breaking a level is a

claim. Volume is the evidence. Now, the

trigger doesn't run on a clock.

Sometimes the very first candle of the

day takes out the pre-market high and

you're in at 9:32. And to be fair, from

what I've studied, that's really the

best version. Sometimes it rides

sideways for a few minutes first, and

sometimes off the open, it sells off

hard, flushes everyone out, and then

quickly comes back and takes out that

level just a few seconds or minutes

later.

I know those look and feel like three

different trades. They are one trade and

the trigger never changed. And one thing

I have to be clear with you about

because almost everybody teaching this

glosses right over it. Um, you're not

getting filled at the pre-market high.

You're getting filled at the close of

that candle that broke it. And that

candle is usually big. And in real time,

it could feel like a chase, which is

what made this trade difficult for me to

take at first. Look at this example. On

Rocket Lab, the pre-market high was 8631

and the stock opened at 8604, just 27

cents apart. On paper, that looks like a

dream riskreward scenario. But the

candle that broke it closed at 8818.

So my fill is $2 above the open, not 27.

So, here's the lesson. When the

pre-market high is sitting right on top

of the open, that tells you the trigger

is going to come fast. It does not tell

you your stop will be tight. Size off

your stop, never off the level. We'll

touch on why this is important in the

next section when we discuss the filters

for this opening drive setup. Okay, we

have four filters. These don't find the

trade. The trigger does. These keep you

out of the bad opening drives.

Filter one, the wick. This one used to

get me almost every time I took this

trade, and I want to describe it exactly

because if you've traded this setup, I

guarantee you've lived this. Price comes

up into the pre-market high, touches it,

and pushes through. So, you buy it. Uh,

and for about six seconds, you're green

on the trade. Then the candle stuffs and

closes back underneath. What looked like

a great breakout in the moment turns out

to have been the top right before the

sellers unloaded. In half the damn time

it felt like I was the last buyer in.

That's a trap. And while it's happening,

it looks identical to the real thing.

That's the whole problem. In the middle

of the candle, you cannot tell them

apart. So stop trying to the close of

the candle is the confirmation. That's

the entire filter. Nothing that happens

inside the candle as it's forming. The

candle has to finish above the level.

Then look at it when it closes. If the

upper wick is bigger than half the body,

skip it. If it closes red, skip it. And

if it never actually closed above the

level, it was a false breakout.

A big upper wick means somebody sold

into that breakout hard enough to shove

price back down before the candle

finished. That is not strength. That is

somebody unloading into your enthusiasm.

Wait for the close. Let the ones that

fake you out ruin someone else's

morning. Filter two, a fresh catalyst.

real news that released in the

pre-market or after the close of the

previous session with heavy pre-market

volume behind it. Or the stock is at a

level so significant that the location

itself is the catalyst, a price

catalyst, such as an all-time high, the

top of a long base on the daily chart.

Filter three, there's room overhead, no

obvious resistance within, say, 3 to 5%.

If there's a wall sitting right above

your entry or a little bit above it,

you're likely buying into somebody

else's exit. Filter four, a strong

market, strong sector. This is so

important. The market's daily chart has

to be above its 20 and 10 simple moving

average and ideally trending up. Not the

stocks daily, the markets. That's the

tape you're trading inside of and it

decides whether momentum gets rewarded

that morning or sold into. And really

that goes for most breakouts.

We want a strong market on the day

itself. If SPY is red, I might pass. And

the stock should be in a group that's

moving at least as strong as the market,

but ideally stronger. On a trade that

lives and dies inside of 10 minutes, you

want the overall market helping you, not

fighting against you. Here at SMB, we

call those market tailwinds. For risk

management, I keep this simple. My stop

goes under the low of the breakout

candle. The breakout candle is the

two-minute candle that closes above the

pre-market high on volume. That candle

is the trade. If price comes back and

takes out the low of that candle, the

breakout is not acting the way I need it

to act. I do not want to sit there and

start hoping it might come back after a

false breakout. I'm just out at that

point. And this is important. That stop

is not always tiny. On the examples I'm

going to show you, the risk is somewhere

around two and a half to 5% per share.

So, you cannot size this randomly. You

have to know your stop first and then

size the trade around that risk. That is

so key. Once the trade starts working, I

trim it to strength. For targets, I'm

usually using round numbers, prior

resistance levels, or ATR. I'm not

trying to predict the exact high. I'm

just paying myself as the trade moves in

my favor. It's a momentum trade. For the

runner, I trail it using the first close

under the 9 EMA on a two-minute chart.

There is also one failure signal before

the stop. If a two-minute candle closes

back below the pre-market high after the

breakout, that is a problem. That is not

what I'm looking for. The pre-market

high was the whole trigger. The stock

can't hold above that level after

breaking it. Sometimes I don't need to

wait for the stop and I'll exit a bit

early. So, the management is simple.

Stop under the breakout candle, trim

into strength, trail the runner, and get

out if the stock closes back below the

pre-market high. All right, let's look

at three examples. Rocket Lab May 8th

earnings heavy pre-market volume.

There's your catalyst gate prior close

7858. Yesterday's high 8479 and it opens

at 8604 above both. So we have the green

light. The pre-market high is 8631.

The first twominute candle opens at

8604, dips to 8587

and blows through the level and closes

at 88

on high arval on heavy volume. We have a

real green body here in this candle. So

the wick filter passes in at 8818 stop

under that candle's low at 85.87

risk $2.31

about 2.5%.

I trim into strength and I'm out by 10

around

98 $99. So about four and a half times

my risk. Four and a half R. It kept

going to 105 and that's fine. Um that's

not my money and that's not this trade.

ARM May 21st. No news at all. And that

is the point. This one is an all-time

high breakout. So the location is the

catalyst. And look at the room overhead.

There isn't any. Nobody in the history

of this stock has ever paid more than

this. Which means there is nobody

waiting to get out at break even or sell

into resistance. Gate prior close 25673.

Yesterday's high 25944.

It opens at 26690. It clears both

pre-market high 268.49.

The break candle opens at 266.990, dips

to 266, closes at 27255.

That's my fill. Stop under the candle

low at 266. Risk 655

about 2 and 1.5%. Extension at the time

of my sell about 6%.

And same plan, we're trimming into

strength and it closes the day at 298.

But I'm just worried about that opening

momentum. That is the trade I'm looking

for. Next, we're going to look at RGTI

on May 22nd.

Sector news. The Trump administration

was reported to be awarding $2 billion

to nine quantum companies through the

chips act. Fresh and it lit up the

entire quantum group, not just this one

ticker. Gate prior close 2204.

Yesterday's high 2210, opens at 2296,

clears both of those. Pre-market high

2357.

The break candle opens at 2296, dips to

2266, closes at 2380. I'm buying at

2380. Stop is 2266.

Risk a$114. That's almost 5%. The widest

stop by a mile. So this is the one that

I would size the smallest. It's doing

about four arvall and it's doing the

most volume out of all these examples

that we just touched on. Same plan.

We're trimming into strength about an

ATR from the open and into whole

numbers. So we have three stocks, an

earnings gap, an all-time high, and a

sector news catalyst. Three completely

different stories. same gate, same

trigger, same stop, and the same exits.

That's the whole point of running this

mechanically. The story changes every

single morning, but the trade does not.

So, here's the whole setup. The trade is

the pre-market highbreak, not the gap,

not the news, not the first green candle

at the open before the bell. I want a

strong market, a strong sector, a real

catalyst or strong technical catalyst

such as an all-time high break. And

there should be room overhead at 9:30.

The first question is simple. Did the

stock open above yesterday's high and

above the prior close? If not, no

opening drive trade. If yes, I mark the

pre-market high and wait. The trigger is

a two-minute candle. Closing above the

pre-market high on volume. Not poking

above it, not wicking through it, not in

the middle of the candle. Closing above

it.

Then I check the candle. I want a full

green body. No upper wick. If the candle

looks like a rejection, I'm not going to

chase it. My entry is the close of that

candle. My stop is under the low of that

candle. From there, I trim it to

strength. often using ATR

and I'll trail a runner using the first

two-minute close under the 9 EMA. And if

price closes back below that pre-market

high quickly after I'm in the trade,

I'll get out. That is the mechanical

model for trading this setup. The reason

I like it because it removes any

guesswork from the fastest part of the

day. I want to trade the fastest part of

the day as mechanically as I could. I'm

not trying to predict whether the stock

is going to rip at 9:30 or close on

highs at the end of the day. I'm waiting

for one level, one close, one

confirmation, and I'm being mechanical.

If you remember one line from this

video, remember this. The trade is the

pre-market high break. Everything else

is filters and management. Opening

drives move fast. Paper trade the setup

at first or size it small enough that

being wrong feels boring. So, you're an

active trader, not doing as well as you

want, not doing as well as you deserve,

and you just can't figure out why you

can't become profitable no matter how

hard you try. Well, let me show you why.

This is your competition. The traders in

this room, this room right here is full

of elite traders, some of whom are

making seven and even eight figures a

year. In fact, our top guys have made

nearly 20 million each in net trading

profits in a single year. Let's head to

my office so I can share more. So,

you're probably used to seeing videos of

lavish trader lifestyles, trading gurus

trading off of a laptop for an hour a

day, heck, maybe even 15 minutes a day,

and then them relaxing on some secluded

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I can tell you is that our traders train

like proathletes. They live and breathe

the markets and are continually working

on their trading skills. Because at our

firm, that's what we found it really

takes to make it in this game. I'm Mike

Bellofury, co-founder and managing

partner of SMB Capital, one of the

world's top proprietary trading firms

located in Midtown Manhattan. And we're

always looking for trading talent to

hire and develop. And not just to trade

inhouse on our desk, but also to trade

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three simple criteria that can earn

anyone an interview. We're looking for

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So, if you believe that could be you,

sign up for the free 1-hour online

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