Chapter 1. What are gaps?

Introduction

To make money from stock trading, you need to adopt a winning strategy, actually master it, then apply it without any emotional attachment.

Author’s goal is to cover the basics of gap trading

• Understanding what gaps are
• Dynamics behind gaps
• How gaps should function
• How they behave
• Why it works

Gap trading can be very profitable but requires a solid foundation of understanding.

Various types of gaps

• Break-away gams
• Run-away gaps
• Exhaustion gaps

Will cover how to adapt your strategy to different market conditions (bullish, bearish, range-bound, volatile)

What are gaps?

• Uses story-telling to explain gaps
• Gap up and filling the gap
  • You find something you want to buy for $50
  • The seller informs you there’s a few interested buyers
  • The seller closes their stall for a few horus
  • You return later in the day when seller re-opens
  • The item you found to buy for $50 is now $100 without any sales in between
  • Filling the gap
    • You decide to wait
    • The seller is not getting buyers at $100
    • The seller negotiates with you for $70
• Riding the gap up
  • Camera is priced at $50
  • You buy it right away
  • Seller closes their stall for a few hours
  • You return to find out seller is selling similar camera for more money
  • You gapped up
  • You can sell or hold for more gains
• Book contents