My 4-Step ‘Dip And Rip’ Formula For Daily Profits

Ever wonder what it feels like to start your day with a win before most people have even finished their first cup of coffee? Yesterday, for instance, I was in and out of a trade before 10:00 a.m., bagging a cool $1,300 on a stock I hadn’t even heard of until two hours earlier. I have the Dip An Rip trading strategy to thank for that. The same repeatable routine I’ve refined and used every single trading day for years. We’re talking four quick checks, one entry, scale out. Simple! No complicated indicators, no options, no nerve-wracking overnight risk. Let’s break down the 4 steps in this formula so you can take advantage of this strategy too.

Step 1: The Gap Scan

Step one kicks off before the market opens, usually around 8:30 a.m. EST. You open your scanner, and we’re looking for very specific criteria to identify potential “gappers” – stocks that have opened significantly higher (or lower) than their previous close. First, set a filter for a price under $20. We’re often hunting for smaller, more volatile plays. Next, a float under 10 million shares. Why these numbers? Simple economics, really. A low float means there’s a limited supply of shares available to trade, making them prone to sharp, exaggerated moves with even moderate buying pressure. Then, pre-market volume above 500,000 shares. This tells us there’s already significant interest and liquidity building before the official open. Add one wildcard: the stock must be up at least 10% since 4 a.m. This combo screams that supply is low, demand is already strong, and momentum is building into the open.

Don’t have a scanner, we provide our in real-time to our members every day starting at 8:00 a.m. EST. Learn more about them and get signed up to access them. You can try them out for free as well since we stream them to the Master The Market Youtube daily as well. Note: the free YouTube stream is delayed 5 minutes. Still helpful, but real-time access is invaluable!

Step 2: The Opening Dip

The market opens, and it’s often a madhouse, right? Algos spike prices, and rookies, driven by FOMO, chase those initial pumps. While catching quick moves can be great using strategies like the Opening Range Breakout, that’s not the goal with the Dip And Rip trading strategy though. We wait. This initial dip is crucial – it represents short sellers entering, expecting the move to fade. Your job is to patiently watch the one-minute chart as they pullback. That initial pullback is often fueled by overeager shorts and panic sellers, and we want no part of that chaos. It will only add fuel to the fire when we do end up buying in the next step.

As the stock settles, draw a horizontal line at the lowest price since the stock opened. If we end up buying based on the criteria in the next step, this will become a crucial level for our trade and risk management.

Step 3: The Reversal

This is where technical analysis becomes crucial. We don’t want to blindly buy all of these stocks that are pulling back. Frankly, the majority of them will continue moving lower throughout the morning. We want to identify the few that are actually setting up for a reversal. Again, using the one-minute chart. I like to look for a higher low or a VWAP reclaim. Buying only after one of those two signals has happened is what will make sure you’re not blindly buying falling stocks.

Position sizing is absolutely critical, and it’s tied directly to risk management. Remember that line that we drew at the lows from step 2? That will become our risk level now that we’re buying into the higher low or move back above the VWAP. If that risk level happens to be $1.00 away from your entry price and you’re max risk (that you’re comfortable taking on the trade) is $100, then your position size should be no more than 100 shares.

Step 4: The Rip🚀

Now that the stock is curling back up, short-sellers from the open will start to panic and cover their positions. Pairing that with all the other buyers can cause an explosive reversal, or “rip!” The goal from here is to strategically scale out of the position. I like to identify some key chart levels, such as the pre-market high or key daily chart resistance levels, to sell half of my shares.

For the remaining shares, you can be a bit more patient now that you have some profits locked in and your overall risk is reduced. Some traders may even move their risk level to breakeven at this point so it becomes impossible to lose on the trade. Selling shares in multiple batches as the price and volume ramp higher is how I tend to scale out of the rest of my position, making sure to capture the majority of the rip with at least some of my original position.

Real Example: $ARBK

Let me walk you through a real-world example, because theory is great, but practice is where it’s at. Yesterday, $ARBK was on my gap up scan with millions of shares traded in pre-market and a float of only six million. At the open, we get the expected pullback. At that point, I still had no interest in buying. About 10 minutes later though, it starts to form a slight higher low and moves back over VWAP (grey line on the chart below). That’s my reversal signal and I buy. My risk level becomes the white line on the chart, the low. The result? $1,300 profit with my total risk on the trade being less than half that.

As you can see, I shared this trade setup in real-time as well to our group chat. If you want all of the tools and alerts you could possibly need to catch trades like this daily, make sure you sign up and join us. We limit enrollment to make sure our team stays tight-knit so everyone gets the support that they need. If we have spots open currently, they will likely get filled soon!

Give this Dip And Rip trading strategy a try, either with a simulated account or real account if you’re comfortable doing so. Make sure to keep me updated with some results in the comments — Good luck!