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Key Takeaways
- The Gap and Go strategy is a simple but effective way to trade the markets. It involves looking for stocks that have gapped up or down in price, and then buying or selling them depending on the direction of the gap.
- When you’re looking to take your profits to the next level, the gap and go strategy can be a powerful tool in your arsenal.
- There are two ways to execute the Gap and Go strategy: Stock gap up and stock gap down.
- Some traders prefer to trade breakout gaps, as they believe that the stock has more upside potential. Others prefer to trade breakdown gaps, as they believe that the stock has more downside potential.
- You should use the Gap and Go strategy when you’re looking for stocks with strong momentum. This strategy can be used in any market conditions, including trending and range-bound markets.
When you’re looking to take your profits to the next level, the gap and go strategy can be a powerful tool in your arsenal. This comprehensive guide will teach you everything you need to know about this trading technique, including how to execute it flawlessly and maximize your profits. We’ll also discuss the importance of pre market scanners and float in Gap and Go trading, the concept of stock gap up/stock gap down, as well as when you should (and shouldn’t) use this strategy. So whether you’re a seasoned pro or just starting out, this guide has something for everyone!
What is gap and go strategy?
The Gap and Go strategy is a simple but effective way to trade the markets. It involves looking for stocks that have gapped up or down in price, and then buying or selling them depending on the direction of the gap. This strategy can be used in any time frame, but is most commonly used in the 1-minute or 5-minute charts.
Gap and go strategy can be used on any timeframe, but is most commonly used on the 1-minute or 5-minute charts. This is because these timeframes allow you to get in and out of trades quickly, before the stock has a chance to reverse direction.
Gap and go strategy is a great way to trade the markets because it is simple and straightforward. It doesn’t require you to have a lot of experience or knowledge in order to be successful. All you need to do is identify which stocks are Gap & Go, and then trade them accordingly.
Why choose the gap and go strategy?
There are several reasons why you might want to consider using the Gap and Go strategy. Firstly, it is a very simple way to trade the markets. All you need to do is identify which stocks are Gap & Go, and then trade them accordingly. Secondly, Gap and Go stocks tend to have a strong momentum behind them, which can lead to large profits. And thirdly, this strategy can be used in any market conditions, including trending and range-bound markets.
How to execute the gap and go strategy?
There are two ways to execute the Gap and Go strategy:
- Stock gap up: You can buy when the stock gaps up, and then sell when it retraces back to the pre-gap price level. This is known as a breakout gap.
- Stock gap down: You can sell when the stock gaps down, and then buy when it retraces back to the pre-gap price level. This is known as a breakdown gap.
Which way you trade will depend on your own personal trading style and preferences. Some traders prefer to trade breakout gaps, as they believe that the stock has more upside potential. Others prefer to trade breakdown gaps, as they believe that the stock has more downside potential.
Importance of pre market scanners in gap and go strategy
Pre market scanners are a vital tool in Gap and Go trading. This is because they allow you to quickly and easily identify which stocks are Gap & Go. Without pre market scanners, you would need to manually scan the markets for Gap & Go stocks, which would be time-consuming and inefficient.
There are many different pre market scanners available, so it’s important to choose one that suits your needs. Some popular pre market scanners include Finviz, Trade-Ideas, and GapScanner.
Importance of float in gap and go strategy
Float is the number of shares that are available to trade. A stock with a high float will have more shares available to trade, and therefore more liquidity. A stock with a low float will have fewer shares available to trade, and therefore less liquidity.
When trading Gap and Go stocks, it’s important to choose stocks with a high float. You don’t want to get caught in a situation where you can’t get out of your trade.
Examples of the gap and go strategy in action
Here are some examples of Gap and Go stocks:
- Apple Inc. (AAPL) experienced a stock gap up on May 9th, 2019 after the company announced that it was going to buy back $100 billion of its own shares. The stock then retraced back to the pre-gap price level and continued higher.
- Amazon.com, Inc. (AMZN) experienced a stock gap down on May 30th, 2019 after the company announced that it was going to buy back $1 billion of its own shares. The stock then retraced back to the pre-gap price level and continued higher.
Advantages of using the gap and go strategy
- Gap and Go stocks can lead to large profits.
- This strategy can be used in any market conditions, including trending and range-bound markets.
- Gap and Go stocks are easily to identify through pre market scanners.
When you should use the gap and go strategy
You should use the Gap and Go strategy when:
- You’re looking for stocks with strong momentum.
- You’re comfortable with taking on a higher level of risk.
- You have a good understanding of technical analysis.
Risks associated with gap and go strategy
This strategy is a high-risk, high-reward strategy. This means that while you have the potential to make a lot of money, you also have the potential to lose a lot of money.
Before using this strategy, it’s important to understand the risks involved. Some of the risks associated with Gap and Go trading include:
- Volatility: Gap and Go stocks tend to be very volatile, which means that they can move a lot in a short period of time. This can be both good and bad, as you can make a lot of money if the stock moves in your favor, but you can also lose a lot of money if the stock moves against you.
- Gap fills: Sometimes, a stock will gap up or down and then retrace back to the pre-gap price level. This is known as a gap fill, and it can result in losses if you’re not careful.
- Illiquidity: Gap and Go stocks tend to be less liquid than other stocks, which means that it can be difficult to get in and out of trades. This can lead to slippage (when your order is filled at a worse price than you were expecting) and commission costs.
Tips for executing a successful gap and go trade
- Use pre market scanners to quickly and easily identify Gap and Go stocks.
- Choose stocks with a high float. This will ensure that you have enough liquidity in your trade.
- Use stop-loss orders to limit your risk.
- Have a plan for both buying and selling the stock because Gap and Go stocks can be very volatile.
- Be patient. Gap and Go stocks can take time to develop, so don’t expect immediate results.
Frequently Asked Questions
What is the Gap and Go strategy?
This is a momentum-based trading strategy that involves buying stocks that have gapped up (or down) in price. This strategy can be used in any market conditions, and it’s based on the premise that there is a stock gap up or stock gap down.
How do I find Gap and Go stocks?
The easiest way to find Gap and Go stocks is to use pre market scanners. These scanners will quickly and easily identify which stocks are Gap & Go.
What is the importance of float in Gap and Go trading?
Float is the number of shares that are available to trade. A stock with a high float will have more shares available to trade, and therefore more liquidity. A stock with a low float will have fewer shares available to trade, and therefore less liquidity.
When trading Gap and Go stocks, it’s important to choose stocks with a high float. This is because Gap and Go stocks tend to be very volatile, and you don’t want to get caught in a situation where you can’t get out of your trade.
Are there any Gap and Go strategy risks?
Gap and Go stocks can be very volatile, which means that there is a higher risk of losing money. You need to have a strong understanding of technical analysis in order to be successful with this strategy.
When should I use the Gap and Go strategy?
You should use this strategy when you’re looking for stocks with strong momentum. This strategy can be used in any market conditions, including trending and range-bound markets.
What are some Gap and Go strategy tips?
Use pre market scanners to quickly and easily identify Gap and Go stocks. Choose stocks with a high float. This will ensure that you have enough liquidity in your trade. Use stop-loss orders to limit your risk. Have a plan for both buying and selling the stock. Gap and Go stocks can be very volatile, so it’s important to have a plan for both scenarios. Be patient. Gap and Go stocks can take time to develop, so don’t expect immediate results.
Conclusion
Day traders who are just starting out may find the gap and go technique to be risky and stressful. During gap and go trading, participants buy a stock just as it opens for trade. If there is further upward momentum for your trade, you may try to sell the stock for a profit later that day. If carried out properly, the gap and go strategy has the potential to provide continuous profits.
