Thread by @AakashSSawant1

Let's understand how to trade gap-up/gap-down,
by understanding gap-theory
🧵
Tags: #StockMarket #sharemarket #Investing #Trading #Breakoutstocks #StocksInFocus #NSE #BSE

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@bhatiamanu @kuttrapali26 @krunalparab_ @KommawarSwapnil

Following are the different types of Gaps.
1⃣ Gap-up
2⃣ Gap-down
3⃣ Common gap
4⃣ Breakaway gap
5⃣ Continuation gap
6⃣ Exhaustion gap
7⃣ Island gap

1⃣ What is Gap-up?
When the opening price is above the high of the previous day, we get a gap-up.
🟢How to trade?
➡️Trade in the direction of the gap-up as long as the price remains above the opening of that day.

2⃣ What is Gap-down?
When the opening price is below the previous day's low it's considered as gap-down
🟢how to trade
➡️Look for only shorting opportunity until the high of 15 min candle is not breached.

3⃣ What is the common gap?
When you see gaps forming within a range, then such gaps are called common gaps.
🟢How to trade
➡️Common gaps within a range will always get filled. so look for trading in the direction of gap filling

4⃣ What is the breakaway gap?
When we get a gap-up/gap-down after price consolidation in a tight range then it's called a breakaway gap.
🟢How to trade it?
➡️Trade only in the direction of a breakaway i.e if we get gap-up then only buy and if we get gap-down then only sell.

5⃣ What is the continuation gap?
The frequent gaps that we get in a trending market are examples of continuation gaps.
🟢How to trade?
➡️Go for positional trade/btst trade in the direction of gaps

6⃣ What is the Exhaustion gap?
When a trending markets give a gap up which is not able to break the previous resistance then such a gap is called an exhaustion gap.
🟢how to trade?
➡️once you identify the Exhaustion gap. look for trading in the direction opposite of the gap.

7⃣ What is the island gap?
after a gap-up, if markets consolidate for some days and give a gap down, then this forms an island gap.
🟢how to trade?
➡️Once the formation is complete you'll see a complete trend reversal. trade in direction of reversal

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