GAP UP TRADING STRATEGY - Golden Setup To Become Profitable

in this video I'm gonna be sharing with you my go-to trading strategy step by step if you've been asking in the comments oh Twitter what exactly do you do as a Trader how do you profit as a day trader what is your go-to strategy how do you trade to make consistent profits well then watch this video because this is exactly what I do every single day welcome back to another humble Trader video if you're new to the channel welcome my name is Shea AKA humble Trader it's no secret so in some stormy volatile market conditions with every single surprise headline economic data and tweets from Elon Musk we've seen some crazy overnight Gap ups and GAP downs but this is actually a good thing for Traders like you and I in this video I'll be sharing a trading strategy that personally being using to profit from all these overnight market conditions the strategy Works whether there's a gap up or gap down because unlike gravity stocks have no rules about going up or down there are only different ways to profit in all directions ever since my ex-husband took half the only thing that gets me excited is the opportunity to make more than him in the stock market I've been told he's still sitting on the money to the stay in this Gap up strategy video today you're gonna learn what is a gap up and gap down in the stock market why it's so effective on large cap stocks a long trading strategy on the Gap UPS a short selling gap down strategy and real live trading examples on these strategies so if you're ready to learn a few trading setups or if you're just here to watch me whine about my ex-husband that's totally fine too please make sure to drop a like on this video I'd really appreciate it so what exactly is a gap up or gap down strategy a quick one-on-one for my new Traders a gap up or gap down refers to a situation when the price of a stock opens higher or lower than the previous day's closing price resulting in a gap in the price chart these kind of overnight Gap may occur due to significant market news such as earnings reports or economic data let's look at an example here on the stock Google on my trading view chart you can see the price is closing price for the stock was around 112 over here and overnight it gapped up all the way to 113 and opened all the way up here at 1 15. so this is like a three dollar per share overnight Gap up the next example over here is a gap down overnight on my favorite stock of all time moderna [Music] anyways there is negative news on the stock you can see that's why the stock you know price is closed was 157 over here gap down overnight and pre-market you know it dropped all the way down to 146. so this is what we call a gap down and this is like a 10 per share huge breakdown day on marginal stock over here and this will be a great short opportunity that we're gonna go over it later on in the strategy video at this point You Must Be Wondering Shea why is this Gap up strategy so effective on large cap stocks well the reason you want to focus on large cap stocks when trading the strategy is because those kind of stocks have two key traits number one is the high trading volume from large cap stocks and number two is the volatility and range large cap stocks are generally considered to be more stable and more predictable than the smoke cap stocks and they have a higher trading volume compared to small cap or low float micro cap stocks and when these large cap stocks Gap up or gap down that brings in even more volume and volatility than normal because they are more likely to be effective but significant news such as quarterly earnings reports or guidance so the first strategy I'm going to show you guys is a long strategy that you can start using right after you're done watching this video tomorrow which is a gap up long strategy this is a very simple technical strategy that's designed to take advantage and profit off of stocks that open up higher than a previous day's close basically an overnight Gap up and you can find them very simply using a pre-market scanner so there are two key criteria to this Gap up long strategy the first Criterion is our short-term technical analysis on the daily chart which we're gonna go over right now so we're looking at the stock Shopify over here s-h-o-p now let's go over to just the daily chart over here enlarge it on our trading view chart you can see on this particular day the stock gapped up overnight from priorities close of like what 48 dollars and got the overnight open at 54 that's a huge gap up now you're not looking for just any Gap up you want to see a gap up over the key daily resistance so in this case if you zoom out on the chart you can see that there's some key resistance above the priorities close 58 Dollars around fifty dollars here fifty dollars and over here 51 and the most extreme one the peak over here the little wigs on the daily chart that's 54 dollars so that's gonna be the most important level that you're gonna look at the next day during the pre-market planning session and if you zoom out and delete the other line for a little bit you can see we haven't tested at 54 dollars ever since here which is April of 2022 that's more than a year ago so now we have the key level on the daily chart looking at a pre-market you can see this stock was already consolidating above that level pre-market fifty four dollars now a lot of times you're gonna have stocks that Gap up to key resistance like this and at the open it just pops and Fades and breaks down so while yes it's important to identify the key level it doesn't mean you just buy a pre-market most of the time despite seeing the stock breaking above key level during the pre-market session I still prefer to wait for the open to execute my buys or sales and we're going to go over the exact buy and sell entry points for the strategy in just a little bit but let's go over our second Criterium for the strategy so the second Criterion is based on fundamental analysis essentially you want to know if there is indeed a positive cat list that's causing the stock to Gap up so much overnight and if we go over to my favorite stock news research tool which is benzinga pro you can type in Shopify over here like I did here to select the ticker click on the calendar tab um you can see um 2023 May 4th which is a day of the Gap up they had earnings before the market open and let's scroll over to see the results of this earnings you can see that the estimated was really bad for the stock they were expected to lose money but in actuality they actually beat they made money instead this is the peps so you can see a surprise Factor over here over 125 percent and same thing for the revenue as well they had a nice beat also so that's the reason the stock is gapping up due to positive Catalyst which is earnings beat and most likely also beat on guidance as well alright so now that you know the most important two criteria to look out for let's take a look at how you should execute on the strategy so remember the key level is 54 on the daily chart over here daily levels that also matches with the pre-market support area you can see a stock spiked to 56 pre-market pulled back to fifty four dollars area and actually reclaim v-wap at the open and break through the new higher day so there's two simple ways to execute the long side on the strategy you can either long when the stock pulls down to key level 54 dollars and give it 50 cents risk which this one happened really quick so nobody could have caught that maybe somebody did but I didn't catch that or you can the second entry will be if the stock is able to break through the pre-market highs area around 56 dollars that we just talked about and essentially you're using these two entry points as your guide to buy the dips along that key levels so either fifty four dollars or over pre-mark highs all the little dips around the 56 dollars are potential entries and once the stock holds the key level breaks through pre-market highs 56 dollars you can see it had a really really strong breakout to almost 60 dollars and that's why it's important to plan out your profit targets as well and seeing the potential upside on this strategy so this is where we want to zoom out on the daily charts like so and look at the range of the stock in a potential upside so we talked about earlier over 54 dollars that's a very important key level right so over this area where can the stock go to if you zoom out this thing really doesn't have any strong resistance until over here closer to 58 dollars here and 60 dollars range 60 61s and why is that because this is also a 52-week highs breakout right so you have multiple things yeah the daily breakout your weekly breakout through the key levels and this is a new 52-week highs and on top of all those technical breakouts you have earnings beat and guidance beat if you've been following along in my YouTube videos you know that earnings reports are some of my favorite Catalyst because they essentially tell you short term whether the company is more bullish or bearish and you when you're trading a stock with technical analysis fundamental analysis all the criteria which is talked about you're essentially writing a trend to the upside following the big money anyways that's the reason I like this strategy so much on large cap stocks is because when it's a multi-day multi-week even 52-week high breakout you get a lot of upside you can see this thing also ran for one to three days so you can play the same setup for multiple days after so anyways all these areas 58.60 are your price targets when you are trading this loan on the first day and even more so on the second day and the third day you can see it went from like the second day went from 57 to 60s and closing in at 62 next day at 64 dollars but of course we cannot just talk about entries and price targets we also have to talk about risk management and how to get out and manage your risk and keep it very small in case the strategy doesn't work have you ever woken a broke or bridge this is what an overnight Gap up or gap down would do to you the results really depends on whether you use risk management and guess what I'm gonna choose Rich every single time so make sure to follow along to learn how to place a stop on this strategy this strategy is actually very very simple if you think about it if a stock is really breaking through 52-week highs it should keep going and form a strong Trend so essentially you want to stop out when the trend is no longer in your favor and one of the best way to do so is with v-wap on the five minute chart so you can see the stock is staying above five minutes and if we're long above the 56 dollars loaning over to 58 59 almost 60 dollars there's no reason to get out until the stock is breaking down v-wap so that's gonna be your risk it's very simple that's the only indicator I use once again I use it for entries as well as for stopping out next I'm going to show you a live trading example on this Gap up long strategy you can see we're looking at the stock p-a-n-w they also have the exact same Catalyst as Shopify they beat on earnings guidance and the stock gapped up overnight um if you look at a daily chart you'll see the same thing you can see on the chart I've identified a key level of 179 180s area stock is gapping up over to 155s you can see I got long over the pre-market highs area of 183s so everything we've talked about I got in half of a thousand shares at 184.90s if we flash somewhere a little bit you can see the stock is already around 187's Mark now I think I made a deadly mistake here of not selling into a breakout if you can see on the daily chart there's some resistance around that 187c area over here that little Wick over here um I did not see that so zooming in you can see the stock is pulling back I'm still in my 1000 shares at 184.90s and you can see the stock is already kind of pulling back fast forward it's testing 187s once again I really should have sold at least like 50 of it but uh I didn't I'm up you know a little bit more than two grand that's decent for like this is what like the first five minutes of the day but I didn't sell that's also the the issue here I think you know when planning out your daily resistance like we did earlier on Shopify you want to make sure you're selling into each resistance so in this case if I have a thousand shares what I should have done is sell at least 300 shares to scale out on my position fast forward a little bit more you can see we're pulling back I still haven't gotten out really should I got to know some on the two minute charts here you can see I am finally starting to manage my position so I went from being up two thousand dollars to now being up only uh three hundred dollars you can see I just added some around V web because 1 000 shares now my full position but still not unless it should have sold some in hindsight this is a pretty good ad remember we talked about using view app as your entry as end as your risk we're now back at 187 I'm pretty sure I sold some up here after the ad but no I didn't really really big range on these kind of large cap stocks but that's why I love trading them well I can't believe I held it on for that long 187s with my average of 185 1500 shares really should have at least sold like 300 shares but I didn't good practice I'm holding on to a winner but at the same time it's a fine balance between holding on to a winner and scaling out into your price targets you can see zooming in we're having some trouble around that 188 area the daily resistance we talked about okay now I'm full size into the stock at 185.50s and I added a little bit on the dips as if you saw earlier on the dips over here um added just a couple more now my average is all the way up to 185.54 and when I'm full size I want a stock to work almost you know right away I'm up five grand I'm realized on the stock so as long as you know this strategy works I'm gonna tell you this became like a very very small winner later because I didn't sell into the resistance levels I talked about but you know I'm happy about my entries and my patience but I'm a little bit too patient in this case Okay so Allah has passed you can see now I sold all my original position all the way here at 187 and like below V web I'm stopping out uh around like 185s break even so I went from being up over unrealized five thousand dollars to now realizing only 300 so you know my mistake here is I didn't sell into those resistance areas which you definitely should be doing and every enter but no this is like a little bounce thing that I'm gonna do but again I realized that they green but not as green as I should have been if had I sold into the breakouts okay I know I just threw a lot of strategies and information at you if all this seems overwhelming don't worry well you learn the ropes on executing your Gap up long strategy I can help you at least narrow down some stocks to trade I have a free weekly watches that I send out every single Sunday you can sign up for it in the link down below if you're enjoying the video so far please remember to drop a like at the bottom of the video and subscribe for even more strategy videos like these in the future alright now that we looked at this Gap up long strategy let's take a look at the opposite side a gap down short strategy remember it really doesn't matter whether stocks are gapping up or down left or right as long as there's volume and range there's still strategies that will allow you to profit on each side now the next Short Selling strategy is available to Traders whose Brokers can let them short a lot of the is easy to borrow stocks so that should be almost everyone besides the users on think will swim just like a previous strategy there's a few key criteria to note for you to trade this gap down short strategy okay now on the screen over here you're looking at the stock PayPal you can see this in gap down huge overnight after once again earnings report you can see on this particular day over here with a huge gap down overnight uh Friday's close was like 76 dollars and this thing gapped down after hours after it really really bad earnings report and the next day pre-market this thing's trading at like 70 dollars so pre-market already dropped six dollars per share on a 76 dollar stock and you can see at the open this thing just continue tanking even lower all the way down to like 68 dollars and sixty six dollars so the first key Criterion is once again technical analysis so which is opposite to what you saw with Shopify the Gap up long strategy on this gap down short you want to see it break down some key support on the daily chart so in this case you know if we go on the daily chart over here you can see the 52-week lows is around the 66 dollars area right so this is almost the exact opposite of Shopify Shopify broke through 52-week highs this one broke down 52-week lows but also you can see like some small little support here in which you know this thing broke tons of different support areas and over here some small ones 69 over here sixty seven dollars um you know this thing was just really weak you can see pre-market this thing broke down to 71's daily support that we drew pre-market already broke down and at the open it didn't even spike it just like dumped through the 69 and then nature on the 68 dollars and that's when it's like started trying to bounce but no no bueno it went even lower to 66 dollars so that's where you have both of these criteria met really really bearish fundamental analysis with the earnings reports and guidance as well as breakdown on the technicals on the daily chart and this short strategy execution is very simple remember this is basically the exact opposite of the previous strategy you wanna shorts using v-wap as your risk um every little small bounces to test these key areas so you know I don't think anyone would have caught this it dropped really quick SSR also triggered so it's impossible to chase the short and then you want to enter on these little bounces towards view app and towards our key daily levels which is 68 dollars with a downside mode to 67 66 and honestly once it broke down that 66 dollars the 52-week lows there's really no bottom in sight for the stock right because you if you want to see more support you have to go all the way to prior to 2020 for PayPal stock but essentially if you've got a short entry on these little pops using v-wap as your risk and these little pops breaking down key support you're looking to join the trend to the downside until the stock have found the meaningful consolidation which it really didn't do until like one two three days on a third day okay now we're gonna dive into a live trading example on this gap down short strategy which is opposite of the loan that we just saw earlier with pen W in this example we're going to use my favorite stock ever moderna stock [Music] I've had some love hate relationship with the stock mostly hate but this is also the stock where I lost the most amount of money on a single trade in one day it's not fun anyways so you can see Madrina star also gapped down from Pride days closed due to this really negative Catalyst and you can see over here on the daily chart I know it's really small on the left-hand side here the stock broke down that 147's daily support and you know and while I didn't catch it at 155 I caught the little bounce at 147 and I only have 500 shares at the time looking for a simple easy trade like a scalp to the downside you can see the stock you know I got in 500 shares around 147s and that little bounce to 147.50s um again my risk will be v-wop reclaim at this point which is if you see v-wab over here 148 so my risk is essentially 50 cents to 60 cents depending on the slippage and now you can see it's already dropping down 144 so I'm in the money three dollars per share remember you want the fundamentals the Catalyst to a line that's bearish as well as the day getting child to be breaking down so fast forward we're on the chart on top we're holding at 145s I think it has downside to a lot lower to like 140s why do I know that because I try to launch in a stock before and it just wouldn't bounce so I learned from my mistakes you can see it's really weak that little bounce you saw earlier to 145 didn't do anything you can see it's back at the lower day 144. okay so fast forward on the chart on my journal here I was getting really bored on the stock and was trying to focus on a couple other stocks I'm watching and you can see down below so I'm trying to cover just a little bit around 200 shares on Madonna around 144 80s so just in case you know when I'm paying attention to something else I've already taken some profit just in case so you can see trying to cover some 144. if you look at the daily chart there's no real support here you have that small resistance here at 144s but I really thought it was going to fade lower fast forward you can see I only have 300 shares left at the same uh 147 average um and covered partial down here earlier 200 shares and trying to see if it's gonna fade even lower and I just found that a closer and maternal trade around this time at 145 over here I'm closing it out over here I think because I think I bring out a patience I I just got filled down here you can see I realized my magena trade on the short side 800 I think the stock later did fade a lot lower so this is a scenario where the opposite happened with the previous live example I was holding on for too long and for this one I didn't hold on to long enough patience is the delicate thing in trading if there's another strategy that you want me to cover please make sure to let me know in the comment section below if you enjoyed this video please remember to drop a like And subscribe and now that you learned this Gap up or gap down strategy it's important that you also know about technical analysis and have another crash course for you over here

Channel: Humbled Trader

Views: 121,751

Keywords: daytrading, day trading for beginners, trading podcast, day trading, day trading strategies, stock trading, forex trading, day trading stocks, swing trading, trading strategies, live day trading, trading bot, trading for beginners, how to start day trading, live stock trading, forex day trading, nifty prediction for tomorrow, intraday trading, option trading, nifty prediction, day trading tips for beginners, options trading, stock market for beginners, day trading strategy

Id: n-SEsjdZaMo

Length: 25min 17sec (1517 seconds)

Published: Mon May 29 2023