Thread by @Bjybnf

My 8 years of experience in 5 min.
A thread on how to trade the gap up or gap down opening .

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There are three factors to monitor to determine whether the gap is real or trapped. The three factors are volume, opening price, and pullback.

1⃣ Gap and Go Trading Strategy :-

- Price gap above the previous day's high.
- Wait for the completion of the first candle.
- Volume should be high and should be helpful in the direction of gap.
- Mark opening range.
- Entry on breakout of day's high
value must be above vwap.

2⃣ Gap-fill Reversal Trading Strategy:-

When a market gaps up, then the gap act as a support level for any pullback. Pullback Tests of gaps on lighter volume tell that the issue does not have enough energy to get through the gap.

Instead .the gap becomes support and any bullish signal is triggered by our buy entry

- Wait for the price gap up
- Wait for a stock to pull back to its prior day’s close and fill the gap.

Two types of Pullback :-

- Price gap up just above the previous day’s high or below the previous day’s low, and then a strong pin bar formed which fill the gap. volume should be high on the pin bar.

- Second price gap up and then retrace and fill the gap. it takes more than 2 candles and the volume should be decreasing

- You then wait to see a sign of strength and enter the position on that move.

- Price should not close inside the previous day in any five-minute candle

- You then place a stop below the low of the candlestick.

In next thread I will cover 2 more strategies on gap trading.

I regular post such threads on Stock market learning.

#Sebi #StockMarket

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