sudhannayak

Gap up Trading - How to Trade the Gaps - Part 1

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AMEX:SPY   SPDR S&P 500 ETF TRUST
Om Namah Shivay

Brothers, Let us discuss on "How to Trade the Gaps" - ( part 1 )

During the trade progression, many gaps happen. There is no hard and first rule to restict them based on count, or based on where gap can happen / where it can not happen.

There is nothing like that. Gaps can happen anywhere during the trend.

Say we want to categorize them, then they can be categorized as 3 types
1. Break Away Gaps - these happen during the initial stage of the trend. ( Check image )

There can be 1/2 Gaps which give thurst to the new trend direction. Again to say - In Market gaps may happen daily. We may not say that there is only one gap which is the type 1 gap. Just we can categorize them that they are the starting gap ups, so are break away gaps. They can be 1 / 2.

2. Measuring Gaps - these happen during the middle stage of the trend ( Check image )

There can be many measuring gaps. Gaps Can be happen daily too. They are told as Run Away Gaps too. They give additinal thurst to the Trend.

3. Exhaustation Gap - these happen during the end stage of the trend. ( Check image )
( showing low volume ? slowing down impulsive move ? we will check in part 2)

Then ? Just Exhaustation gap came so trend is not going to end. Trend continues. May be another trend which adds to initial one. And other possibilities.

This is part 1 of the series. We will learn more in part 2 base on reader likes.

Om Namah Shivay