How can you determine the size and direction of a gap for trading decisions?

I trade gaps, however, I am only interested in quite sizeable ones. First I would like to point out that too many traders use the wicks/shadows of the candles to indicate the gap, however, as mentioned, it should be from the previous close to the new opening price. I dislike small gaps as I like to wait for the market to enter the gap as confirmation and also exit before it closes (can always reenter if it breaks further). With a large gap, I can allow for it to start to close and exit before it closes keeping a minimum 1:2 risk-reward ratio and taking enough profit to make the trade worth considering. Attend one of my technical analysis workshops where I provide live examples of my analysis and various charts I use. [email protected]

Key to market dynamics is the principle of supply and demand, notably in gap-up and gap-down situations. Positive post-market and pre-market news can elevate demand, causing potential gap-ups, while negative news may result in gap-downs. Analyze pre-market order flow to assess buyer-seller balance before the market opens. In the presence of predominantly buyers and minimal sellers in pre-market data, refrain from shorting the gap up. Opt for strategic long entry points. If pre-market bid/offer data indicates a prevalence of sellers despite the gap up, consider initiating a short position promptly. Risk Management: Prioritize risk management due to inherent volatility and liquidity challenges in pre-market and post-market trading.

O problema principal é a escolha de uma ferramenta para coletar estes dados, onde podemos ver o histórico com os envolvidos e com esta informa??o saber quest?o de valores. Muitos utilizam o MS Project, outros mais brutos o Trello, mas n?o tem uma ferramenta salvadora, ideia é utilizar a que mais tem experiência para você e se uma ferramenta n?o atende a tudo, buscar outra sabendo que precisará coletar dados entre elas para correlacionar.

Moving averages with previous candles and with the help of anchored volumes. If the volume is up then it’s may be a gap up in next day candle.

Understanding the customer's needs is crucial to determine the extent to which pricing can be negotiated (principle of supply and demand), ultimately leading to the best solution for both parties in a B2B context.

Determine whether the gap is upward (bullish), downward (bearish), or neutral. An upward gap suggests positive sentiment, while a downward gap indicates negative sentiment.

The direction of a gap is the same as the direction of the price movement that creates the gap. A gap can be either bullish or bearish, depending on whether the price jumps up or down. You can use the direction of a gap to confirm or contradict the prevailing trend, as well as to identify possible reversal or continuation patterns. For example, a bullish gap in an uptrend can signal a continuation of the trend, while a bearish gap in a downtrend can indicate a reversal.

Nornallay all gaps are news driven it can be financial or changes in any fundamental so whatever the reason it can be trending gaps or reversal gaps also which gives us direction of particular asset

Die Richtung einer Lücke ist entscheidend für die Marktanalyse. Bullische Lücken, bei denen der Preis nach oben springt, best?tigen oft einen Aufw?rtstrend. B?rische Lücken, die nach unten zeigen, signalisieren h?ufig eine Umkehr in einem Abw?rtstrend. Diese Information erm?glicht es Tradern, den aktuellen Trend zu best?tigen oder zu widersprechen und unterstützt die Identifikation von Umkehr- oder Fortsetzungsmustern. Die Berücksichtigung der Richtung einer Lücke spielt eine Schlüsselrolle bei der Entscheidungsfindung und erm?glicht es Tradern, ihre Strategien an die sich ?ndernden Marktbedingungen anzupassen.

If a gap is not filled within the first 30-40 minutes of trading, then it is likely that the price will continue to go in the direction of the gap. My favorite gap, in terms of usefulness, is the runaway gap. The runaway gap is also known as a measuring gap. These occur in the middle of strong trends and have only minor corrections. A measuring gap is very useful in determining the price target after the gap. For instance, in an uptrend the price distance to the middle of the gap from the preceding low can be used to estimate the price target above the gap. Always measure to the middle of the gap, and from the middle of the gap for the next leg up. This allows a savvy trader to set sell stops at or just shy of the target.

Nada como o estudo, mas ter a experiência para saber onde prever as lacunas e saber o momento para atuar é a grande chave para o sucesso.

Amongst all the types of gaps that are seen, the best results may come from identifying the combo of 'Exhaustion gap followed by a Break away gap' Now this is easier said than identified in real-time or backtest. The exhaustion gap once filled is no longer visible on EOD charts and thus very difficult to backtest. Once identified correctly and executed with prudent risk management, this system can very efficiently identify trend reversals.

Common types of gaps include Breakaway Gaps, Runaway (Continuation) Gaps, and Exhaustion Gaps. Each type may have different implications for the market

Exhaustion Gap Trading Identification: Look for a gap occurring at the end of an extended trend, often accompanied by high volume. Watch for signs of trend fatigue, such as divergence in momentum indicators. Entry: Wait for confirmation of trend reversal after the gap. This could be a significant move against the trend or a closing of the gap. Stop-Loss and Target: Place a stop loss just beyond the extreme of the gap. Profit targets can be set at major reversal points or using Fibonacci retracement levels. Rationale: This strategy aims to capitalize on the end of an existing trend. Exhaustion gaps often indicate the final push before a reversal, offering a strategic point for entering a trade in the opposite direction.

The gap area significance a price zone where to transactions have been filled. It basically represents a number of unsatisfied buyers/sellers. Thus, gaps are the biggest psychological signal. The larger the gap, the more significant the implications. The most important gaps remain unfilled and lead to the beginning of accelerated trends.

Gap analysis is like taking a snapshot of the stock market's mood swing from one day to the next. to check if there's a noticeable jump (up or down) between yesterday's closing and today's opening prices.

Saber utilizar estratégias visando todo o estudo e cenário que foi apresentado é saber o momento de entrar e sair, pois sem estas partes definidas é o mesmo que ver no escuro.

Understanding market conditions through gap analysis is crucial to determine the extent to which trading strategies can be planned. This process helps answer questions about the likelihood of filling gaps, confirming or contradicting trends, and signaling potential breakouts, continuations, or reversals. Employing various technical analysis tools like trend lines, support and resistance levels, chart patterns, volume indicators, and candlestick patterns is essential for effective gap analysis. Additionally, considering the context, time frame, market sentiment, and news events enhances decision-making, leading to a comprehensive strategy.

It's a bit like predicting if the market is a morning person or not, When there's a gap a jump between yesterday's close and today's open ,traders use it as a chance to make moves.

Gap trading is a strategy that involves exploiting price gaps that occur between the closing price of one trading period and the opening price of the next period. Price gaps can happen for various reasons, such as overnight news, earnings reports, or other significant events. Traders who use gap trading strategies aim to capitalize on the price movement that occurs as a result of these gaps

Gaps provide good information on market and potential future price movements. Trend Confirmation: Gaps that confirm the current trend can be used to reinforce the existing market bias.Gap Size: Measure the size of the gap by calculating the difference between the closing and opening prices. Larger gaps may indicate more significant market sentiment. Analyze the trading volume associated with the gap. A higher volume can be a confirmation of the price movement's strength and sustainability. Gap Filling: Traders often anticipate that, gaps could be filled, and the price will return to the pre-gap level. BUT this technique comes with risks. MUST combine gap analysis with other technical tools, and stay informed about market conditions

Gap trading is a popular and potentially profitable strategy used in various financial markets, including stocks, commodities, and forex. A gap is a break between prices on a chart that occurs when the price of an asset makes a sharp move up or down with no trading occurring in between. The benefits of gap trading are manifold and can offer traders unique opportunities. Gaps are visually distinct on price charts, making them easy to identify. This clarity provides traders with well-defined entry and exit points. For example, a trader might enter a trade at the start of a gap and exit when the price returns to its pre-gap level, a strategy often employed in 'gap filling' scenarios.

Gap-Trading nutzt Preisbewegungen durch Gaps und erlaubt Strategien sowohl in als auch gegen die Lücke. Die "Gap and Go"-Strategie kauft oder verkauft den Er?ffnungskurs einer Lücke und h?lt die Position bis Sitzungsende oder Erreichen von Ziel- oder Stop-Loss-Levels. Geeignet für Breakaway- oder Runaway-Gaps mit hohem Volumen. Die "Gap Fill"-Strategie handelt den Schlusskurs der vorherigen Sitzung und schlie?t, wenn der Preis den Er?ffnungskurs der n?chsten erreicht. Effektiv bei gew?hnlichen oder Ersch?pfungslücken mit niedrigem Volumen. Die "Gap-Umkehr"-Strategie kauft/verkauft den Er?ffnungskurs einer Lücke und kehrt um, wenn der Preis den Schlusskurs der vorherigen Sitzung durchbricht.

In my experience gap trading should be analyze with the help of volume and the strength. For example if market gave gap up opening with strong volume alongside the strength then it indicates that the positive momentum will continue and vice versa. To check the strength of market you can use indicator like RSI and others. Gap trading should be analyze with the help of volume and strength to get the confirmation about the movement.

as an analyst , we use technical and fundamental analysis, along with risk management strategies, to make informed decisions based on gap analysis. it's important to stay updated on market conditions and adapt your approach accordingly.

Breakaway gaps are news/event generated, whether company specific or macroeconomic. This results in trading the momentum after the gap has occurred. It is important to have coincidental volume surge to validate the breakaway. Exhaustion gaps are a sign of the end of the momentum near term, and do not require outsized volume, which make them a bit trickier to trade due to the lack of confirming technicals. Breakaway gaps are initiated due to information. Traders may want to pay attention to the ODTE looking for spikes in activity as an omen.

In addition to the previously mentioned elements, it's essential to consider market liquidity when conducting gap analysis. Liquidity can influence order execution and the effectiveness of strategies, especially during significant gap occurrences. Assessing liquidity can provide additional insights to enhance understanding of market conditions and strategic decision-making.

Mr Raut is absolutely correct, all trading requires meaningful due diligence. His example of evaluating volume is imperative as to whether or not you may see continuation in the initial move. I've seen a tremendous number of retail customers be completely wiped out due to a refusal of paying attention to heavy market buying or selling. Just because the market gaps does not mean it will close it immediately or even within a year.