Most dilution traps don't look like traps. They look like clean setups with strong catalysts and real pre-market volume. You enter. The stock runs. Then the selling starts - steady, relentless, no news. You're down 30% before the second candle closes.

The company didn't ambush you. They filed the paperwork weeks earlier. An S-3 registration, an ATM offering, a shelf filing - shares approved and ready to sell into any price strength. The filing was public. You didn't check.

Most traders don't check because they don't know where to look or how to read what they find. The process takes 3 minutes on SEC EDGAR. Search the ticker. Look for active S-3, F-3, or 424B filings. An S-3 means the company can sell shares at will - no announcement, no warning, any volume. An ATM offering means they're actively dripping shares into the market right now. A DESPERATE status means the company is running out of cash and the selling pressure won't stop until they've raised what they need.

Run this check before every small-cap entry. If the filing is active, size down or skip it entirely. The setup doesn't matter if the company is selling into your position. One check eliminates the most painful trades in small-cap momentum.