![]() What Does it Mean When a Stock Gaps?Īny time a stock opens higher or lower than it closed, that creates a gap. And/or they miss the opportunity to trade it properly, with high probability and good R/R. They get invested in that story, and they lose big. Too many traders tell themselves a nice story about why a gap happened. So you don't want to get married to an idea of why a stock gapped or didn't gap. And, gaps are often wrong, meaning the gap would get filled. Knowing why it happened is only a small part of understanding the context and trading it. Economic data releases caused the whole market to gap down or up.Īvoid getting hung up on why a particular gap occurred.The sector in which the company operates had some high-impact news affecting the whole sector.A large trader(s) sold or bought a big position(s) through an on-open order.Momentum of the stock was strong enough that traders rushed in or out during the extended session (ECN trading between close and open).The company released news or earnings results after the market closed or before the open in the morning.Stocks can gap for a wide variety of reasons. ![]() Price action around gaps, explanations for it, and ways to take advantage of it.Possible meanings of different types of gaps, and common myths about those meanings.The types of gaps, why they might happen, and where you can look for trades.You want to have a firm grasp on that before you try trading gaps. The secret to stock gaps is understanding the context of each gap. By the end of this, you should be less scared and more ready to start studying and using gaps in your trading. It can be difficult, but gaps present some of my favorite opportunities. Trading gaps can be scary, exciting, or both.
0 Comments
Leave a Reply. |