Wednesday, April 16, 2014 12:22:06 AM
So now that we know this happens, we just need to adapt to it and learn how to p-rotect ourselves in these inevitable situations.
So the best way to deal with a GAP at the open,
You first need to look at the size, as it will determine the strategy you take. A small gap for me is 10%-20%, with that size it can keep running all day long if the volume is strong. NOTE: SUBBIES (0.00X and 0.000X stocks can have acceptable larger gap-ups)
But 50% is way too much. You know Market Makers will k-ill it all the way down to a zone of support. That’s where you want to take it for the bounce back up as most of the time it can come back and then breakout of the opening range to run again higher.
ONE BIG WARNING, if a stock doesn’t find support in the area of the previous close level at the very least, then you need to take your loss quickly because this means the stock is not going to go higher.
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