The first thing we’re gonna discuss are gaps but I’m not gonna go crazy stupid silly in detail all right because what I ultimately want to get down to is scanning and I said this earlier but if you can’t scan you can’t trade period. I mean sure you can spend your whole life relying on somebody else to scan for you but why.? Why would you want to do that right, I mean that’s not what this is about that this business is about becoming a self-directed trader… why?
Because if you’re a self-directed trader nobody can ever take it away from you. Nobody, it’s yours, you own it.
I want you to look at the bottom these six things are questions you should be asking yourself before you look at every gap or as you look at every gap
1.Where is the stop gapping to?
2.Where is it gapping up from?
3. Is there some type of shock value to the gap
4. Is the stock gapping just enough to clear significant support resistance or is it gapping excessively so as to ruin the risk-reward?
5. Is this stock gapping into the void or into resistance?
6. Is that gap showing relative strength or relative witness to the market typically make them more potent?
So these questions you need to be asking every single time you look at a gap. Every time you look at it Again, you need to be asking yourself those questions.
The shock value and the relative strength are two of the most important things you need to be asking yourself.
Mike says, ” Is there some type of shock value in the gap showing relative strength room
What this means is for example, if the market were gapping down say it was gapping down 1% and you see a gap like this on OLED over a wide range red bar over a pivot. Oh my gosh, I mean I would need a towel to stop me from drooling. That’s how nice this gap is why?
It’s nice because there’s a tremendous amount of shock value. Your gapping over a prior pivot where sellers came in. How
do we know this? Because of the topping tails and then the wide range red bar, so we’re taking out all of these people
Right. Some people yes, I know it sounds crazy but, it actually happens. Some people actually thought about shorting
this stock. I’m gonna short it back to move in and then you wake up boom!. So you have shock value here. You’re gapping over a pivot with room to move higher and then imagine, imagine the market was gapping down on top of it. Imagine one more step, imagine the market was gapping down significantly into support. So imagine the markets
down four days in a row at support and it’s gapping down right near support and it’s a big gap like one-two percent. What is the market gonna do? It’s probably gonna pop that day and then you get a stop like this….
Super nice, if you’re not finding these you’re not scanning hard enough. Do they happen every single day, this nice of a gap no but this is why you always need to be scanning.
That Glengarry Glen Ross always be closing well in trading it’s a ABS it’s always be scanning. You’re not scanning you’re not finding these things all right so these are the types of gaps you need to be finding in the pre-market same