we have explained how to trade morning gap strategy in detail. Here take a simple approach to analyze the market and focus on two types of gaps as full and gap fill. The full gap occurs when the price never breaches its prior day close. The gap-fill occurs when the stock gaps on the open at some point during the day overlap with the previous day close. The gaps are filled at the point of the day if stock gaps are hard that can go day and week before filling its gap. These are called breakaway gaps. They are fun to trade if you know what you are doing.
If the stock opens with a bullish gap as the price could fill the gap on the chart with a bearish move. The gap appears with high trading volume. Then volumes will decrease with the pullback. There is a gap that opens with high trading volume then volume drops off a cliff as price action begins to trade sideways as the bearish gap has another tiny bearish candle. The candle appears small due to a drop in volume. The next candle is the called hammer reversal candle pattern. It implies the price action that reverses and fills the gap. The volume on the candle is lower so the next candle is bullish breaks the top of the hammer. It confirms the reversal potential of the pattern and buys Citigroup. The price action starts a move that is opposite to the gap. We can place a stop-loss order below the low of the hammer. The price continues to increase and reaches at top of the gap. The price increases and reaches the top of the gap after considerations. It completes the target and exits our morning reversal gap fill trade. Trading the gap for a living is an approach to tackle the markets in the morning hours.
The first 5minute bar tells you about the strength of the stock. Then start out as I would buy the breakout on the first 5-minute bar. It worked and grabs the lion's share of a 15-minute or 30-minute run on the open. It is a dangerous part to get believed at each stock that performs on every buy. The hard part is that the smack in the face comes after success. If you do not have a stop in place this is where hope comes into play as you are still living in the past.
view moreThis is best for the morning setups. So wait for a stock to gap up and then see consolidation near the high. So consolidation takes place over 4 to 8 bars. I like a stock to not retreat much into the strong gap up the candlestick. Stock to stay above the 10-period EMA clear that stock is trending hard.
The strategy works for other traders but we should master it. So wait for a stock to pull back to its prior day close and fill the gap. Then see a sign of strength and enter the position that moves. You place a stop below the low of the candlestick.
The gap and go strategy is the best day trading strategy. So traders are looking for stocks gapping above the previous day's close price. The momentum of breaking news breakouts causes a stock to breakout. By using a stock scanner to hunt for gaps in stocks in the premarket is helpful to find these plays. Then map out support and resistance level in the premarket. Then watch if the price breaks above premarket highs at the open and continues.
Pros If you get it in the right way you can earn a lot of money in a short time span. First, open trade before the market close. Then close your position in the morning. There is no need to watch charts for hours at a time. So it is easy comparatively.
The morning gap is risky for an average trader. They can be unpredictable than the average trend. So the biggest risk is that it is outside of market hours. So your stop loss and limit order doesn't work. So you can lose from a gap going against you.
Gap trading is a popular way to day trade because there are countless different gap trading strategies and gaps. The best way to trade gaps is to look for and buy into what is known as a gap and go. Before getting started go through the basics and explain what a gap in the stock market is. The gap is good as exactly what it sounds like. This is an empty space on a stock chart caused by a lack of trading activity. It happens on the daily chart because daily charts do not show price action during extended-hours trading. When a stock makes an upside move at extended hours known as a gap up. And when a stock moves down in an extended hour it is known as a gap down.
© 2020 All rights reserved My blogs (Posts) and videos is only educational purpose on stock market and depend on my self research and analysis. I can't advice to buy/sell any stock. because I'm not SEBI registered.If someone wants to inter the stock market, then my advice is first learn from an authorize institution or take advice from your authorized adviser.
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