I think a few years agone when I couldn't merchandise fantabulous stocks together with super plays because of a sure as shooting maxim almost gaps.
"All gaps volition last filled."
When I asked to a greater extent than or less adept traders almost sure as shooting setups that had gaps, to a greater extent than or less would ever hand a spooked together with particular warning. "Wag bit nang e merchandise yan! Hala sige, babalikan GAP nyan!" Which ultimately clouded my judgement.
What is a gap yous ask?
A gap occurs when there's an intense buying or selling pull per unit of measurement area on a stock, that the toll opens a few to several flucs away from it's previous closing price.
Now going dorsum to the disceptation that all gaps volition last filled. Many would tell this alongside the notion that the termination volition travel on at nowadays or inward the close future. But this is non ALWAYS true.
Gaps beingness unopen may travel on but the query hither is... when?
A week? Influenza A virus subtype H5N1 month? Influenza A virus subtype H5N1 year? Probably a lifetime?
Assuming yous didn't merchandise since belatedly Jan of this twelvemonth because of the gap that was created during that fourth dimension - imagine all the chance losses.
Assuming yous bought COSCO dorsum inward 2013 because of the belief that gaps teach filled - Imagine your losses together with how long you're ipit.
Gaps are uncomplicated events inward our markets - if it doesn't teach filled, it only way beastly forces are almost to seem on the direction of the gap.
 |
Exhibit A (Gap Down) |
 |
Exhibit B (Gap Up) |
There are many other examples out there.
So the side past times side fourth dimension yous location an unfilled gap, try non to complicate things. Trade what yous see.
No comments:
Post a Comment