Morning Gap Trading Strategy: Gap, Fill, and Go! -- with David Moadel
hello friends and welcome to looking at the markets with David Modell today I'm
going to give you a trading strategy it is a type of morning gap trading
strategy it's for intraday trading or day trading and I call it the gap fill
and go trading strategy so you might have heard about the gap and go or the
gap and fill well this is gap fill and go alright so before I get started I
just want to let you know that if you want more help with trading or investing
you want some help putting together a plan for your trading or your investing
because you definitely want to have a plan if you want to be successful in the
long term you can email me for coaching at David
Modell at gmail.com alright so let's take a look so this is on trading Viacom
and this is the one-minute candlestick chart I recommend for this trying the
one-minute candlestick chart because you're going to want a lot of detail as
opposed to the five-minute candlestick chart where you you don't get a new
candlestick formed until every five minutes so you get less detail or the
15-minute or something like that but you could use whatever you like you can use
the one to three minute candlestick chart whatever you like and so what you
have is a gap here this is micron stock 1-minute candlestick chart and so as you
can see you add yesterday's clothes and then today's open was is a lot higher
than yesterday's close and that's called a gap because you have some trading in
the aftermarket after hours on this day and then also in the pre-market hours on
this day and so often times it'll open higher or lower than yesterday's close
and so that's called a gap and today with this strategy I'm going to focus on
gap ups not gap downs okay so as you can see there's a gap up compared to you
know in today's open compared to yesterday's close what happens sometimes
though you get what's called a fill basically a retracement it goes back in
the opposite direction alright and this is a complete fill it totally
filled the gap back to yesterday's close okay sometimes you have a partial
retracement or partial fill like 50% let's say but this was a hundred percent
and that's what I'm looking for and what I've noticed sometimes what
happens after the full retracement or full fill of the gap a complete fill
what happens sometimes is it's almost like a magical force comes in it's not
really magic but a seemingly magical force comes in and then pushes it back
up throughout the day up and up and up okay and so but it's not really magic if
you're wondering what's going on there a lot of the time is that this will be I
hate to call the dumb money that's not very nice but what's the opposite of the
smart money right it's it's the you know the the morning people who have just
been waving waiting to get it and they rush right in and they buy after
something is very high so you know that's the retail traders a lot of them
get in and then you know they get dumped on and then who buys low the dumb money
no the smart money the institutional traders step in because they want to buy
low they wait for the retail money the dumb money again I don't mean to use
that disparaging mark you know a term but yeah they wait for the retails to
get dumped on and to lose money and then they step in then they buy that happens
sometimes you know so and then they do well and unfortunately the the retails
not so much all right so what you want to do if you want to
try this strategy out is wait for the full you wait for a nice big gap up and
then a reach a full retracement that's powerful and then you can step in start
accumulating or take a long position if you want to now where you put your
stop-loss where you put your profit target that's a whole separate video I
do have a video on that I'll put that in and
link below this video in the description if you want to learn about stop losses
and profit targets things like that but your profit target in this case could
easily have been the you know the height of the gap there alright so let's take a
look that's micron stock let's take a look at another example Home Depot stock
same thing you got that you know that's where close to the previous day
one-minute chart again and then it opened up here and you know the retails
who bought up here the so-called dumb money they really got dumped on they got
hit art went right back to that same level about where it opened and then in
steps the smart money you know the institutional traders the algos and they
did quite well up and up and up alright so again this it's not perfect and this
will not work 100% of the time so you want to have some sort of stop-loss
probably in place or just some way of some exit strategy in case it goes
against you and I also recommend virtual or you know demo account trading at
first just to make sure that it works for you before committing capital using
before committing real capital to it and using very small position sizes when you
do attempt to trade it with real capital so you don't get hurt too badly if it
goes against you alright so I hope this was helpful to you it's
it's a new approach so instead of just a gap and go or gap and you know Phil
you've got gap Phil and go and go and go and go right ok it doesn't always work
out perfectly like this so just be aware of that all right but more importantly
you want to have a plan so you know what to do when to get in when to get out
which stocks to even put on your watchlist and a trade things like that
position size is how much do you put in there things like that I help people
with that so if you want the coaching you can email me at David Modell at
gmail.com and hey if you like this video let me know and that way I can be
encouraged to put out more videos like this one and you can let
know by giving me a thumbs up on this video if you like it and leave a comment
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like this one thanks a lot I really appreciate it I'll talk to you again
soon