Pre-market gap rules that keep me out of crap

[Fairman]

Pre-market gap rules that keep me out of crap: hard gates before the story gets romantic.

- Spread: if the PM spread is already wider than my live max, kill or observe-only.
- Volume: relative volume fading into the bell → downgrade the idea.
- Catalyst: unconfirmed rumor only → B-list or skip.
- Float and liquidity: too thin for my size → hard kill.
- Earnings binary: size down or flat.
- Index: SPY/QQQ against the gap story → cut size or skip.

Gaps are conditions, not setups. These gates decide whether a condition is allowed to become a trade. I also force a one-word plan by 09:20 ET: continue / fade / skip. Blank gates and blank plans are how gap-and-crap becomes gap-and-account-damage.

A worked example of running the gates. At 08:45 ET a name is up about 9% premarket on a headline. Gate 1: PM spread is 4 cents, my live max for that price range is 3 cents, so it's already observe-only unless it tightens. Gate 2: PM volume was building until 08:30 and has slowed since, so downgrade. Gate 3: the headline is a report citing unnamed sources, no filing, no company statement. Rumor, so B-list at best. Gate 4: liquidity is fine for 300 shares. Gate 5: no earnings this week. Gate 6: SPY and QQQ are flat to slightly red.

By 09:20 the plan field says "skip." Three gates downgraded it and none upgraded it. At 09:31 it opens, spikes 30 cents, and I feel the pull. The sheet already answered. By 09:50 it has either faded or kept going. Either way, it wasn't my trade, and I'm not keeping score against a name I skipped for good reasons.

Failure modes:

- Letting a strong open "retroactively pass" a gate that failed at 09:10.
- Measuring the spread once at 08:00 and never again.
- Treating a sector sympathy move as having its own catalyst.
- Loosening the spread gate because the percentage move is big. A big move with a wide spread is still a wide spread.

When to skip the whole gap list for the day: major macro release at 08:30 ET that moves the index hard, or a morning when I can't get through all six gates on my A-list by 09:20.

On liquid ETFs the same gates still apply; the numbers just differ. On thin names I shift every threshold more conservative.

Diagram: six gates on one card.