Visit our COVID-19 site for latest information regarding how we can support you. For up to date information about the pandemic visit www.sacoronavirus.co.za.

bs-regular
bs-extra-light
bs-light
bs-light
bs-cond-light-webfont
bs-medium
bs-bold
bs-black

Community


Share knowledge. Ask questions. Find answers.

Online Share Trading

Engage and learn about markets and trading online

Video - why you absolutely need to know why gaps are closed

Reply
Not applicable
So maybe to put it another way (jes to make sure I get it); the front runners see they are ahead (the gap). Those left behind, the smart guys that is, wait rather than try play catch-up. Soon enough, the front runners sell to take a quick profit. The smart laggers don't buy from them, they let the suckers do so. Once front runners have unloaded their holdings, the buyers and sellers dry up and the price drops to a level where the laggers are willing to come back in. Ergo, the gap is closed.
0 Kudos
Tango
Super Contributor
I was going to keep quiet, but I also stuffed up my short yesterday. Goes to show that being right on a trade is only about 1/3 of what you need to be successful. My head was not in the right place and I fluffed the trade. After 3 knocks on overhead resistance, I went short on the first reversal bar. Short at 26526. Ratcheted my stops too tightly, and got stopped out for a tiny 11pt loss. It then ran away, and should have been a 300+ pt trade for me. Sucks to be right, take the trade, and then still fluff it.
0 Kudos
john_1
Super Contributor
Yes but it worse 'cos the smart money shorts the gap 80% probability of making money. That is what chartist is saying 1 he is smart and 2 he is prepared to short this gap.
0 Kudos
Not applicable
Nope ...John has a far too benign view of the market...no kindness whatsoever...The shorts cover i.e. they buy cause they are hurting or because their stops are doing it for them...which ever one ...they are not buying cause they want to...the fools that are flat see this...they think....hell time to get in and they buy....both kinds of buying lead to "fade" its runs out cause there is no plan behind the buying....as the fade happens we see selling as the fools who are unsure of their positions exit...
0 Kudos
sax
Frequent Contributor
John, i've had a look at day trading, i see you work on 100pts profit per day. Is that not to little? How much % profit would you make on that?
0 Kudos
john_1
Super Contributor
Chartist let me clarify I competly agree with you, what I am saying is after the gap, what causes the fade to close the gap is smart money( not the overnight shorts or the happy bunnies who bought first thing in the morning) to start to short the fade -not the gap and as such forcing both the short covers and the happy bunnies to part with there morning coffee money.
0 Kudos
Not applicable
Yip know what you are saying....there are ppl who only do this for a living so of course they will be loking to take shorts when the fad happens..of course the really really smart money does nothing and waits for the gap to close and then trades in the direction of the trend...
0 Kudos
john_1
Super Contributor
For a living I will trade in the dirrection of money, leaving trend following to hobbiest.
0 Kudos
SimonPB
Valued Contributor
ya, of course the really really smart money does nothing and waits for the gap to close and then trades in the direction of the trend. Which charty got all shirty over when I suggested it yesterday.
0 Kudos
john_1
Super Contributor
I am just yanking your trail Chartist, I thought you were trading the gap close, is that not the whole point of your video. 80% chance of making money despite any prevailing trend.
0 Kudos
Not applicable
me shirty?....never...point taken...even if you dont trade them gaps do give a great insight into market pshychology
0 Kudos
Beep_Beep
Super Contributor
OOOI - and I thought this was simple when I looked at the video... hehe. You guys put a whole new perspective to trading.But I get the point.
0 Kudos
john_1
Super Contributor
True this has been a very worth while thread as it has made me think it through. thanks.
0 Kudos
Brazen
Super Contributor
Typical males, happiest when you can complicate things. Tip - in a bull market go long, in a bear market go short. Hint - we are in a bull market.
0 Kudos
john_1
Super Contributor
Hah! for men its black or white for gils it a thousand shades of grey.
0 Kudos
Not applicable
0 Kudos
john_1
Super Contributor
Must have been, but so unconsious I still dont quite know what it was.
0 Kudos
Not applicable
..I was thinkin fishwife. Not the Squeeze, of course, never the Squeeze..
0 Kudos
john_1
Super Contributor
0 Kudos
Not applicable
Hi C yes agree with what u say ... Iam i big gap fan but one thing to remeber is that the hole gap forms support in bull and resistance in bear run ... there for the bigger the gap the hard it gets to predict support or resistance or entry or selling point ... I normally will sit and keep a eye on it the following day to see what it does. In the top 40 chart u showed have a good look at how the bottom of the gap held support on all 3 gaps and 2 spikes at support the last being todays. I had a cople of nice runs with the waves just by getting in at the bottom of the gap, like they say history repeats itself and in this sernario it worked very well for me ... there for my point is the bigger the gap hang on see what it does ( hole gap is sup and res ) , the smaller the gap the better it becomes to predict your entry point ( support and resistance smaller )I nibbled a bit with ANG looked at it the hole day ... it gapped and had a good run ... only late this afternoon tho
0 Kudos