Trading Gaps for Daily Profit

Trading Gaps for Daily Profit

Hey my friend thank you for read this article on trading gaps for daily profit this is Barry burns with top dog trading and let's jump right into it so training gaps is one of those classic techniques that everybody learns normally right at the beginning of their trading career and it's a very very popular way of trading it's very appealing in the sense that it looks easy at first glance and it also is one of those things that doesn't work as well as it used to and it doesn't work the same way as it used to work but that's not surprising because it is so popular anytime anything becomes popular guess what that's raid about the time it stops working everybody knows about it everybody starts trading it and guess what most people lose money so once everyone starts doing something it stops working you've got to have an edge by that I mean you can't be doing the same thing everyone else does so here's the classic pattern that people are always looking for so we've got one day here by the way these are California times down here and this is a daily no it's a three-minute stock chart and so you've got your open way down here and the previous day closed way up there in the easy way for trading gap trades gapped reading strategies gap trading intraday gap trading rules whatever is to just say okay I'm going to trade it back into the close of the previous day in Japanese candlestick patterns by the way they also traded gaps and they call it closing the window so it's really nothing new to the Western world the Japanese were way ahead of us on that so they said okay windows open and now it's going to close all righty that's great any yep that's fun when it happens but it's not the way it normally happens anymore I'm sorry they never make it easy for us to do it do they okay but obviously it's still that happens sometimes and there is an example now let me show you what happens most of the time these days here's another example and if you were you say alrighty we closed here this day and we opened down here this day and I'm just going to trade the gap clothes right away you'd be a sad little puppy because it didn't close right away in fact let's watch this whole day see how it closes when it closes all right so we think well okay I'll just treat it later in the day and the day ends there's the end of the day and it still didn't reach the gap close there's the line right there so one of the questions when it comes to technically how to trade this is alright where do we put the line so if we're looking for the gap to close now technically you would say we should do it at the previous day's close because that is literally closing the gap it closed at one price one day and then it opens at another price another day and you're waiting for it to close or get back to the close of the previous day that's not the best way to do it the best way to do it in my opinion is to look for the little low there and that's just a more conservative way to trade it because I've seen many times where if you put it at the close or the last bar could be a green bar and it may be the close would be up there then and the markets are not that perfectly neat and tidy and so they're kind of messy and they're messy because you've got millions of people all over the globe trading and teen different things different time frames and so forth so don't expect it get to the exact penny pip tick or pixel on your chart that you wanted to get to allow for that messiness would be conservative and place it at the lowest low there and wait for it to come back into that level ok so now that we have established that technique here's the other thing that I want to share with you after at the market gaps quite often what happens is it goes kind of sideways for most of the day in fact yeah so what happens there you go big move down with our nice gap boom okay and goes all the way on actually goes all the way down to there in the first three minutes so from there to there in the first three minutes what happens the rest of the day not a whole heck of a lot of anything alright it just kind of goes sideways that is what normally happens now that is the norm that is what you will see more days than not and remember trading is about trading probabilities and we never know what's going to happen there are no certainties so we're trading probabilities and this is the probability scenario and part of the reason logically is because after the market has a big move down and remember this is not showing any pre or post market data because if you show pre and post-market data you won't see the gap so there's been trading that's going on over an eighth day or early in the morning before New York opens and now so what's happened is a bunch of people shorted and when the market opens open outcry and most people are looking at their charts they're saying hmm dang I don't know I've already missed out on that big of a move so whatever I want to do do I want to go short now I mean the dominant direction is down but I already missed out on all that so psychologically the Masters are saying I'm getting in too late on the other hand the sentiment is bearish so some people are thinking gap and ghost some are gonna buy thinking that the gaps gonna close and you've got this conflict so you've got people on both sides in the bottom result is that after gaps quite typically on a daily or a intraday chart the market really just doesn't go anywhere just kind of goes flat for the rest of they it's usually not a great trading market for the rest of the day so here we go and it's a several days down the the pike here about three days later and we get another gap so from there to there do we get a gap close if you're gonna trade the gap closed maybe you even wait for the peak there to come back down nope sorry you are not going to get it the whole day goes by and they does not ever close so what does happen well just what I said gaps up and now we've got conflicting views in so therefore the market goes sideways for most of the day it finally does go up but again goes up in the afternoon after lunch actually so if you are going to look for a market move after a gap usually it's going to be after lunch and that's exactly what this is this is one o'clock New York time ten o'clock California time and where does it go it goes back to this blue line hey wait a minute what's that blue line well that blue line if we scroll back that's where this gap started so the gap does close eventually this gap that we just showed but it closes not the same day there's day one and I'm gonna scroll through faster the two nope day three yes yes so it took three days for that gap to close therefore what I recommend is that you do put these levels on your chart and make them something unique like a different color or whatever color you want that you know means something to you but just that you don't use for anything else so you might use something that stands out you're not gonna use it for other support resistance levels so let's say when they use goldenrod okay and we're going to make it a little thicker so it really stands out and that whenever I see that line with that thickness I know oh wait that's where a gap close would occur and it is acting like almost like a magnet really that yes the markets are very aware of gaps the masses are aware of gaps no question about it and for that reason they do tend to have a self-fulfilling prophecy so I put it on there but I don't expect us necessarily going to fill in the first day or even two might take three I take more oh in fact what the heck let's look further let's take that puppy off of there and let's look in some further examples here so here we get another gap from there to there that's the open and that doesn't close there's your gap from the previous day okay so that one doesn't close and we do not close that day let me just put the line on there again make this clear for you so there I would put it there see now this day we closed here but I wouldn't put my line there I'm gonna put it down here just to be conservative right so then now look what happens this is cool let me ask if that's all in one chart you can see this so we gapped down this day we don't fill that gap that day again notice how the market kind of just goes sideways for you know most of the day then the next day the gap fills but you don't really have a chance to take the trade for the gap fill because it gapped up into the gap fill so it gets down and then it gets back up into the gap fill well great no opportunity to take that trade unless you were treating overnight again we get the same dynamic here that I was talking about a pretty good gap up okay goes up and then what's it do for the rest of the day just kind of go sideways sorry not really anything exciting to do if you didn't want to do something and be in the afternoon take that little move there so now this level it's not only a gap closed but it is a support levels the market bounces off of it comes back again as support in bounces back off of it alright goes back on up and let's see there we go get another one good fact we got two more so let's look at these real quick I've got a gap up market again it doesn't really go up much from there it goes kind of sideways does not fill the gap next day gaps up it's a gap and go goes up but again what most of the day after reaches its high it's just going sideways the afternoon you get your movement where it breaks out alright well if you like this video please understand that yep it's free but if you got value from it please you have a moral obligation to pay it forward by sharing it with other people click that beautiful little share button below it's a real pretty nice little button there and you will feel good you will sleep well tonight if you click that button knowing you did the right thing and that's really the best thing you can do to help encourage me to create more free tutorials for you click the thumbs up icon leave a comment below I love your comments by the way they really encouraged me as well and I'm giving away one of my favourite trade strategies called the rubberband trade which has a very very high win-loss ratio simple trade I'll teach it to you in about 26 short minutes get my rubberband trade strategy absolutely free by clicking on the image in the top right corner of this video or in the description below of the video and if you're not watching on YouTube then there's probably a link below or an opt-in form on the side once you do one of those choices I'll personally email the video to you with the rubberband trade strategy you


trading gaps for daily profit, gap trading intraday, gap trading forex, gap trading strategy, gap trading stocks, how to trade gaps successfully, intraday gap trading strategies, trading opening gaps, trading morning gaps, top do trading,