What has been said publicly
In his episodic pivot post, Kullamägi calls volume the number one thing to focus on. The definition there requires massive volume near the open: ideally the stock trades its average daily volume in the first 15 to 20 minutes or faster, and preferably heavy volume is already present in after-hours or premarket trading, though that is not always the case.
The three-setups article gives a slightly wider window: if volume is not there premarket, it needs to come in at the open, and many of the best examples traded their average daily volume in the first 15 to 30 minutes.
Premarket
Heavy volume before the open is preferred, but not required.
First minutes
The best examples trade a full day's average volume within roughly 15 to 30 minutes.
First candle
The post describes waiting for the first 1-minute candle and watching the volume before entering.
Premarket and the open
The post says trading in extended hours is rare and that the preference is to wait for the opening range high, watching volume closely as the first 1-minute candle forms. It also notes that on smaller stocks the big volume sometimes arrives a few minutes after the open, so a quiet first minute is not automatically disqualifying.
A gap that was not an EP
The three-setups article uses an NVIDIA report from its 2016 to 2017 chart as a counterexample: big earnings and a big beat, but the stock gapped up only slightly and sold off. The article says this was not an EP, because an EP needs a gap of 10% or more and big volume, either premarket or in the first 5 to 10 minutes. Strong numbers alone did not qualify it.
Measuring volume pace (our method)
The method below is this site's own way of turning the description into a number you can record consistently.
- Before the open, note the stock's average daily volume over 20 or 50 sessions.
- At 5, 15 and 30 minutes after the open, record cumulative volume including premarket.
- Divide each by the average daily volume to get a pace ratio.
Our example: a stock averages 2 million shares a day. By 15 minutes after the open it has traded 1.6 million, including premarket, a pace of 0.8. By 30 minutes it has traded 2.3 million, a pace of 1.15. Under the published description, that second reading is the kind of volume that confirms the gap. The numbers are hypothetical.
Volume and the entry
The post describes entering once the opening range high breaks, often adding on the 5-minute high for more confirmation and size, with the stop at the low of the day and no wider than about one, at most 1.5, times the ADR or ATR. Volume is the reason to act on the trigger; the stop rules are covered in low-of-day stops and the ADR cap.
The opening volume log
- Record the gap size and the catalyst.
- Note premarket volume and the average daily volume.
- Record pace at 5, 15 and 30 minutes.
- Mark where the opening range high broke and on what volume.
- Compare outcomes by pace band across many EPs.