Why is it so important to learn gap trading as early as possible in your day trading career? It is a technique that, once mastered, can be the bedrock of a great day trading career.
Day trading is a complicated yet lucrative business. With the right interactive brokers, you can make plenty of money and stay out of the cubicle rat race, but the question is how hard are you willing to study? You need to learn your way through plenty of trading strategies and trading techniques in order to become a successful day trader. And that means absorbing a lot of information, learning the terminology and applying it in a real world way.
One of the best strategies to learn when you are just starting out as a day trading is the gap and go. Instructors at Warrior Trading have been teaching this technique for a long time. First of all, what is a gapper.
A gap stock is any stock that is trending up higher in the morning, pre-opening bell, than it was priced at the afternoon before when the markets closed. That means that there could be a catalyst lurking out there that is set to jump the price of the stock right away. That is why it is essential to jump on these types of stocks as early as possible in the morning, when the market opens. Identifying and grabbing gappers early is a great way to lock in some wins early in the day.
Gappers are prone to make gains quickly, based off of an earnings report or other breaking news that drives interest in the company. There are other technical indicators that could tell a story about the stock that is ready to gap up, such as the float, or number of shares available for purchase. If a stock has 5 million shares available to buy and 1 million have been traded pre-market, there is a very good chance that the entire stock of shares will be traded during the day. With the right catalyst, float level and investment bank interest, that is the perfect storm for a gapper that goes on a big run.
The entry point for your buy is very important. You need to know at what candle to buy at. You need to figure out the pre-market highs and prepare a buy order to get the stock at the pre-market high. That is one way to really take advantage of trading gappers.
For the other ways, it pays to take a spin in one of Warrior Trading’s online courses. There you can learn real, actionable strategies for winning at day trading and have a chance to work in a trading simulator, so it
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