Day Trading Gaps for Beginners (In-Depth Guide)
Pleasure to have you here traders um in this mentoring session I'm going to talk about day trading gaps you probably know that that would be my main strategy but you know before I start with that I just want to tell you something very important about having your own strategy you know I developed my strategy on how to trade gaps throughout the years it's not something that you do overnight it's something that takes years to come out with a strategy actually a trader should have several strategies you know what most traders I know don't have more than five strategies on average something that they specialize in something that they feel comfortable with something that they do by themselves before I continue and explain about my strategy which is not really my strategy because a lot of traders do the same thing all over around the world so it's not really my invention I do take it and I do tweak it a little bit but and make it ready for me to make it you know as appropriate for me as possible but you know it's something that every trader around the world does develop their own strategies and many of the traders around the world have strategies that have to do with gap trading now why is that because gaps are extremely volatile so you want to have in one of your strategies at least one of your strategies has to do with gaps in fact there are many types of gap strategies now before I get into the gap strategy the one i want to talk about today i want to mention thing that is extremely important here if you do not develop your own strategy you're doomed you don't have a chance to survive and what do I mean by that you know we're trading in the trading room there's several of us traders there's several analysts several experienced traders in the world if you're just here to follow us and you're starting out you're doing the right thing because if you're just starting out if you're an office trader and you want to look for a strategy or develop your own strategy and you are basing it on some kind of knowledge that we can give you for example you follow my trade you follow Scott's trades, Danny's trades, Yogi's trade whoever and then you develop your own strategy based on that that's fine but if you just keep following us and do whatever we do you will never survive you can't survive jumping in between strategies you can see something very interesting in the trading room you you can see that uh what we do uh is different between every trader has a different way of trading I rarely take Scott's trades he rarely takes mine I mean maybe on an average once every two days I will take one of scott's trade or he will take mine why is that he specializes on his strategies i specializes on my so when I'm getting into a trade I know exactly when to click the button I'm flying with this trade I know exactly when to get in I know exactly when to get out I don't think about it I do but it's it's something which is in my nature it's something that I understand so you see if you want to develop something you need to develop your own strategy you can't just copy strategies of other traders I've seen traders who just copy strategy for the rest of their lives they will never be successful because you need to have one, two, three to start with and then tweak it and work with it and and you know adapt it to your needs and to the way that you trade so if you are with us in the trading room you need to understand that our job is to provide you with the basics of what we do but in order for you to develop your own strategy in order to survive trading otherwise you're just not going to make it seriously you need to come up with your own so why should I teach you about the strategy that I'm using personally right now if I don't expect it to be your main strategy or whatever that is because some parts of what I'm going to teach you today could be a part in your future strategy and again that's my job to give you a little bit of this a little bit of that and to come to the point where you understand what I do better and then maybe take it and adapt it to your needs and your needs are probably much different than mine you don't have the same amount of money maybe you have more maybe you have less in your bank in your trading account uh your your mentally built a little bit different than I am some people are you know like take more risk or less risk so you see or trade early or trade later five minute candles one minute whatever my strategies can only give you some kind of basic idea of what i do I'm going to get a little bit more into details now but that should that should be your starting point to build your own strategy so I hope I was clear on that I hope it makes sense and that you know you could do something with the with what we're going to learn today okay so with that said let's start I'm going to talk about trading apps today and specifically I'm going to talk about trading gap and goals but before I talk about gap and gos I want to show you uh the basic gap strategy with which is in fact gap close strategy you know most gaps are getting closed when I say most gaps I would say 80% of gaps are getting close or at least stock is moving in the direction of closing the gap so look at the example you're seeing here this is from today five minute candles CCL started with the gap down approximately one percent and as you can see the first move was up at that point over here it closed the gap it continued a little bit higher and as something that normally happens when the gap is getting close change direction and came down now that would be the main gap strategy traders use why it's very easy to do it's normally activated on five minute candles you can see the first five minute candle down second a reversal candle third a very clear technical reversal you can go long over the highs or even before that and you can target the place where the stock closes close the gap very easy strategy to work with most people prefer that I'm going to talk to you now about gap and gos which is the exact opposite a gap that opens down the stock continues down or we get that opens up and then the stock continues up that's a close strategy which is more common simpler to use and I'm not going to talk much about it today I mean just the basic idea you need to understand the rhythm that most gaps are getting closed and I'm talking now about gaps up to three percent and the smaller the better like this one for example is one percent so the smaller the gap the more likely it's going to get close the reason for gaps to get close is not you and I as traders helping it to close the gap it's institutional traders institutional traders are closing gaps the reason they're closing gaps is because they are hired by someone to buy large quantity of stocks in fact institutional traders are 80 percent of the volume of the stocks that we're trading so if an institution trader who's ordered to buy CCL finds out in the morning that CCL starts with the gap down of one percent he is buying it until the point where the gap is closed the reason he's buying it is because he's getting extra commission from his customer he's the same customer who asked him to buy the stock and therefore pays him commission normal commission would be around three cents extra commission could be another 10 cents so the institutional buyer who's buying now below yesterday's closing price which means commission is getting extra commission that's why stocks moving up and closing the gap that's 80 percent of the volume remember comes from institutional traders that's why they are in the game that's why we're following them that's why gaps are getting close now I'm not getting into this into inside this into details but you need to understand the main force in closing gaps is institutional traders so having that said CCL gap close is due to institutional traders why did all of these four trades didn't work out the same way why did ANF start with the gap down try to move higher and fade why did the DLTR start with the gap down tried to move higher and failed why did ADSK start with the gap down try to move higher and failed why did RIDE start with the gap up moved higher tried to move lower and continue higher I would call it fail to close the gap right so all of them failed to close the gap they did not fail as a trade I mean they moved the right way they moved the way I the direction i wanted them I'm not showing you what happened later i mean i don't care about what happened later i only wanted to see what happened during the first one hour because that's the time of the gap and go whatever comes later I'll be out of the trade but the gap and go system works best during the first one hour and usually starts quite early it starts like in the first two three five minutes so sometimes you get a chance to trade it with five five-minute candidates sometimes you don't so since if if you're constantly concentrating on this kind of trades then normally it will be a gap and go during the first few minutes and you will need one minute candles now let me take up ADSK here hold on a second let me get to this point where we see what happened during the first few minutes okay then we're watching ADSK in one minute candace ADSK started down I believe that was a little bit more than seven percent now what's the story of a gap and go well the first idea is to take a look at the gap and see that we have a very very big gap I will prepare to this trades pre-market time so pre-market time I will go over my top 20 it is in my ColmexPro platform I will go over the top 20 and I will just take a look actually it's not top training anymore it's big movers big gappers and I will take a look and I will find all the stocks that are starting with a big gap I mean two percent is fine I would just make different lists one list is the one two three percent they could move up and close the gap but then would be the the list of the stocks which starts down over three percent that would be a little bit more rare and and having a stock is getting down six seven or ten or twenty percent would be even more rare okay but I'll make the list of these stocks and today I didn't find a lot I mean I had the same four I showed you here there may have been one or two more there were I just forgot symbols right now and some of them were a little bit too spready or whatever so I was watching them but I was preparing pre-market time in fact I find them approximately anywhere between one hour pre-market to 30 minutes pre-market I will make my list but this list is not on paper it actually comes on one of my charts so I would have like 20 actually one two three four five two three four five twenty five different I think it's one yeah 25 different charts about half of them a little bit more would be short candidates uh the big gappers and then the smaller gappers and some of them would be long candidates big gappers small gappers whatever so I'll be looking pre-market time for stocks which are likely to become very volatile today I'll put them on charts and then I have my main four charts which I just showed you the main four charts that I have on my screen are the ones that I'll be looking to trade during the first few minutes so I'm preparing with the the whole group of stocks that I'm watching today and I'll be I will be preparing as well for the stocks that i will be trading those comes on the main four charts and for each of this chart I have the level two and the time and sale so I'm really prepared to trade this these four, so one of them my first three today was ADSK so right out of the gate I knew ADSK is gonna start with a big gap down pre-market time you could you could see that of course things could change but it started with a big gap down so it started with a big gap down the first move was up that would be the perfect technical formation well before I move into that let me just say the following you remember we talked earlier about gap getting close and the studio traders are closing the gap and while they're closing the gap because I get thanks commission I did not get into the details I would like to explain some other time uh the whole idea of why the gaps are getting close and what exactly happens with these issue traders now you just have to trust me they are the ones of closing the gaps they are 80 of the volume we are only trading I mean i am only trading stocks over 10 dollars and over 1 million shares in volume daily the reason for that is because institutional traders are not involved in stocks under ten dollars well ninety percent of them are not involved with stock under ten dollars and they need to see large volume so over ten dollars over one million shares that's kind of okay that's a little bit marginal for the institutional traders the more volume there will be more institutional traders so higher volume over ten dollars they will be there and there will be eighty percent of the volume so if they are working their way up closing the gap or down if it's a gap up and they are shorting no excuse me they are not shorting they are selling institutional traders don't short so if they are buying or they are selling and then the gap is getting close that would be something that they will often do and that would make it normally a very high likelihood for the gap to get closed and again you can trade it but we're not talking about this kind of trades right now so why do I expect ADSK instead of going up and closing the gap to gap and go to come down the reason for that is quite simple and if you have any question please write them down I am looking on both sides YouTube comments and our training on comments here so if you have any question if you have any remark to make please write it down and I'll try and stop it once in a while and ask and and and answer your questions so yeah please write them down okay so why do I expect ADSK to come down why wouldn't it move up some reason like CCL earlier did and you know move it up and close the gap the reason for that is really quite simple institutional traders are buying or selling stocks instructed by their customers so it could be a big fund who told Goldman Sachs to buy CCL one million shares without buying one thousand shares it doesn't move billions of dollars of the funds and so on so they will buy large quantity of shares now if they are instructed to buy let's say there's an institution traders who was instructed to buy 1 million shares of ADSK ADSK last few days were going sideways it was fine nothing was wrong and the same institutional traders let's say Goldman Sachs who was instructed to buy one million shares started doing their job so they bought 100,000 the day before and then yesterday they bought another 100,000 they can't buy too many at one at the time because then they will drive the price out up and that means they'll get fired and no commission and no extra commission and you know what commission means for people who are all traders so anyway uh they are instructed to buy ADSK percent of the volume in ADSK comes from situational traders so again stock starts with the gap down it's under yesterday closed theoretically there should be some extra commission because the institutional trader could buy it right there at a very low price and then the price will go up no normally in the agreements between the institutional traders and their customers let's say a fund there will be the three percent clause the three percent clause means the following now it doesn't have to be exactly three percent it's normally around three percent the three percent says the following if a stock whatever we have an agreement I'm gonna buy you one million shares of ADSK if the stock gets up all down more than three percent stop buying or stop selling because remember eighty percent of the volume in ADSK means eighty percent are also buyers and also sellers it's not just buyers but I'm talking about the buyers right now because it's under yesterday's low so the buyers look at ADSK institutional traders don't care but they have an agreement and agreement says don't buy why well you have to remember that the the customer who's buying the stock let's say again a fund somewhere he's interested in buying one million shares of ADSK because they believe ADSK would move higher they are mostly fundamental thinking they are not thinking about the technical analysis here there but they have analysts they have advisors and the advisor said well we think ADSK should do well so anyway they started buying ADSK and all of a sudden gets down seven percent wow stop then kicks in the three percent rule stop now stop right now why can't you buy ADSK because it get down more than three percent something's going on we don't want you to continue by you you bought 200,000 out of 1 million stop stop right now we need to see what's going on in ADSK I mean what happened there again fundamental thinking they they are they they have enough power normally they have enough power to call the CFO of ADSK called the chief financial officer of the ADSK and ask what happened please explain okay we're not the man well too much let's continue buying they will come to a decision like in a week from now they will have this they will have a sit down with Goldman Sachs and with their advisors and we they will discuss okay ADSK can get down some person what shall we do we're certainly not buying it right now with the open let's sit down a week from now and decide what we're going to do with ADSK maybe at the end of the day maybe in a few hours definitely not now so stock is gapping down three percent clause kicks in no institutional traders well not exactly right there may be some who are still instructed to continue buying so you can I can't really say 100 no but let's just think now that if earlier we had 80 percent institutions and 20 percent traders actually not traders investors because in the 20 group we are a very small part you know just just a fraction of this 20 percent 20 are more like Warren Buffett's not him i mean people who think like Warren Buffett long-term investor swing traders and of course some traders so we are in the 20 okay now that it changes now we'll probably like 80 I mean we long-term investors and traders now we are probably like 80 and institutional buyers or sellers are now probably around twenty percent and again some of them will continue some of them will have a clear instructions to continue buying ADSK whatever reason I don't care I don't know but the vast majority now is going to be people like us normal people people who fear people who greed and that's where fear and greed kicks into the equation so now I have to stop thinking about institutional traders I have to start thinking about who I have to start thinking about us about normal people so this is where it becomes a little bit more complicated because now we're talking about people we're not talking about clear black and white rules like the institutional traders you know institutional traders again you can read them clearly because they sign the book and you know what they're doing you know what they're doing you need to know what they're doing if you know if you're a trader you need to know what they're doing and then you can follow or you can expect the next move so what happens when stock is gapping down let's say down and then we talk about the stock that gapped up what happens if the stock is getting down in a big way like ADSK well let's talk about the people who held it yesterday or several months ago you know what let's take a look at the daily of ADSK here's the daily of ADSK as you can see it's rather strong right i mean it was moving higher recently and here's the last one here it broke out nicely recently it's rather strong so most people think about the investor now forget about you forget about traders think about the investors so what would most people do so they love it for whatever reason they believe it's going to move higher because they are fundamentally thinking and all of a sudden their beloved stock gaps down seven percent they still believe in it it's like your football team do you do you have a football team which one do you support write it down in the comments if you like anyway it's like your football team so it lost so it lost the last three games it lost the last five games do you still support it of course you do will you keep buying ADSK it's like your football team of course you do you support it stock is down seven percent you believe the world of it you told all of your friends that it's a great company you were right it was trending higher and you bought it yourself and now it's down seven percent so maybe I'll buy some more maybe I'll double down people do that they do this huge mistake you know when the stock is gapping down seven percent it gets down for a reason and it's probably going to continue it's not going to stop right here it's I bet you it's going to continue when I say I bet you it's going to continue it's because it's very likely to continue it's because 70% of the time it will continue coming down but there is the 40% percent of the 30% that it will stop here and come up which is less likely okay it's more likely to continue coming out so buying it buying a falling knife or catching a falling knife is a is something you're not supposed to be doing and there are of course people who are averaging down their loss so think about recently the stock moved higher people were buying most people by the top you know this thing where everybody tells you ADSK is such a great company until you make a decision it's already sky high and then you buy and then it falls you know that you've been there right so anyway these people are averaging down their losses so let's let's go back to the intraday and see what happened today with the ADSK at the beginning of the trading session which is right over here okay right over here so at first the buyers kick in I don't really know if they're gonna kick in at first normally they will come in the first five or ten minutes they do that I mean as a whole they do that but they're likely to fail they're likely to fail because fear is much bigger than greed and when the stock is moving up it accumulates some more buyers but then the people who already decided to buy or people who had automatic buying orders because of stocks just fail to their entry point they are the ones who are likely to get out of the game they are the ones who are likely to lose again likely it doesn't always happen like that but if it happens 70 percent of the time like that then you can probably make money that's what I do so you want to see them buying you want to see it moving higher that would be the perfect technical formation there are some other technical formations I'll show you I'll show you soon but you want to get in after the failure of the buyer if you don't see a failure of the buyer well then it becomes a little bit more tricky in fact it becomes much more tricky at that point it becomes much more dangerous at that point so you look at the ADSK it starts with a big gap down institutional traders are out of the game they're not going to drive the stock higher they are just sitting on the fence waiting now so the the ones who are buying again those private individuals who are buying some of them institutional traders could be are buying and then you the only thing you need to look at is a nice technical formation for a reversal now normally when a reversal like this comes that would be the reversal I mean just imagine now that I'm just gonna theoretically paint it I mean you know what I do have a painter I don't think I ever used it here no okay let's leave it so anyway just imagine this stock starts moving higher comes down and then imagine an uptrend now it moves to a new high and then comes down a new high just imagine this pullback here could be just a small pullback in order for the stock to start moving higher so normally if you are planning to go long what you should see is a pullback up to 61.8 percent fibonacci pullback and at that point you could start thinking about buying you look for a small reversal and then you start buying but the thing is when the stock is gapping up in a big way like ADSK down seven percent today you do not expect the pullback to take you back to the highs you expect the pullback to show you the high of the day that's how it normally is and that would work 70% of the time because again the buyers would usually move out and then what kicks in is the real fear and the fear would take it under the lows and more that would be your trade what comes next I don't know i moved out I had to stop somewhere I don't remember I think it was 315 i had to stop for the rest of my quantity anyway i was out adsk came down because of the fear mainly because of the fear and because there's no institutional traders out there and because the buyers were just there for a short while until the stock finally came down again because fear rules now if I'm going to show you uh the rest of my trades today you can see that things were quite similar with DLTR and ANF let's talk about ANF here the first move in ANF again one minute candles was down very disappointing when I saw this today I was extremely disappointed I mean I was watching ANF first candle second candle third candle it was coming down I wasn't disappointed I mean ANF started off eleven percent down I believe something like that it started down it was one of my main candidates and it was just going down without the buyers moving in so then I saw that then the buyers came in but just remember if the stock is just coming down you cannot participate not I mean it could clearly continue moving lower but at some point during the first 10 minutes normally the buyers will come in those people who are bottom fishing the people who are averaging down their loss they would normally come in at some point and you need that so when I was watching ANF coming down initially and I was trading ADSK I was happy with ADSK I thought well I'm missing this trade and then it stopped and moved up very nicely now the way that it moved up suggests that those buyers who probably thought that the gap will close or they can buy it at a lower price or they're just averaging their losses they thought it's going to continue moving higher and then comes the topping tail and again just the technical formation first sign of a pullback that then at some point here you can short it so if you want to short it you can definitely short it somewhere around here to and expect it to continue coming down and that was the trade in ANF I also added once it walked down under the lows which was a good thing to do because it continued coming down and once it broke down under the lows it gave me the it gave me the confirmation that I needed to know about uh the fact that it's not gonna come back up not during the first few minutes anyway so it came down added once it came down on the lows and and continued the only thing you need to look for is the buyers to come in stock that is starting with the get down noise tissue traders buyers who would normally come in like most of the time they will come in and they did come in ANF a nice technical reversal look for the technical reversal shortest talk it's likely to continue coming down don't expect this technical reversal here to take it up to the highs again that would be rare that would be losing trade for me because I would expect it to come down and again fear works much better than greed that's the reason you always have to wait for a first pullback see the reversal and then go short somewhere and look for your target there's another thing I want to talk about here I'll read your questions first but let's just say your entry point is 35.50 which I believe is the right entry point I can't remember which was mine really today but right now looking at it I think 35.50 would be the right entry point for a short let's let's discuss that for a second but before that are there any questions entry point yeah I'm just talking about that right now hedge funds yes of course such funds Leo short stocks not all of them not all of them but I would say most of them they do short stocks but they are not the main volume they are relatively very small volume compared to the big funds they are the smaller players out there so yes they do short but most of the volume comes from institutional traders and I'm not talking about hedge funds now entry point yes we're talking about that what if buyers cover 50% of the gap and after a failure what would you do okay good point I didn't want to get into this detail right now but since you ask it I will answer if you look at ANF and ANF doesn't stop right here and just continues over the highs and covers approximately 50 percent of the gap don't mess around with this trade you can mess around I mean short it not here you can short it somewhere where it closes the gap it's likely to close the gap and then come down if you remember earlier we watched CCL that would be exactly like CCL again look at CCL don't short it as it goes higher wait until the gap is closed look for a reversal and then short it that would be the best way to do if you're trading stock like CCL but it does happen sometime for a big gap that it continues higher if it moves up around 50 percent it has something's going on i mean it has an upside momentum don't mess around with it that was a good point to mention and that's all how would you find your gapers talks at the start of the day Tim I have it in my ColmexPro platform are you trading comics or TEFS you you also have it though so just just look for that I mean it's there and there are some other platforms of course that shows that big pre-market movers you can probably find on some websites I just don't need to Aaron asked when it breaks down under the lows do you add depends I'll talk about it it breaks down or you wait for another pullback everything is possible here Aaron you know it you know I have to say this not all trades are created equally sometimes I look at the market the market's coming down and I feel like I have the the markets helping me so that could cause me to add okay so how much do i head now 50 of the initial quantity double my size you know it depends also on the stock is it very volatile is it spreading is it this you know i have to trust technique formation do I like the technical information do I the market working there's no really clear black and white rule here but and i don't always add okay so it has to do with with how much I like the trade Zuhair when preparing for your trade captain go strategy uh do you check the daily yes I do check it extender for downside the upside yes absolutely it's very good point you know let's take a look at ANF here let's take a look at the daily when you take a look at ANF daily let's move to 12 months here okay what you can see is the entry point right over here the entry point right over here suggests the following it's a good point you just mentioned okay i'm gonna draw the line here that's the line of entry okay that's the line of entry you need to take a look at the last six months or so and what you're seeing with ANF is that most people bought it higher than the price that it gapped down today so if you look at the last six months you can see that most people bought it somewhere over here over our entry point we shorted it right there so once we shorted it at that point most of the people here were disappointed buyers if you have most people disappointed buyers it's more likely to come down stronger look at the daily and ask yourself who are most of the people who recently bought it the people who recently bought it are people who bought it higher than today's past now if the gap would have been somewhere over here somewhere over here and it just moved to a new high and then gap down well people could still live with that because you know they still most of them bought it five percent lower it's it's again it it's the mental you need to think about the mental status of the people who are holding it at that point what do they think if most of them bought it higher then it's more likely to come down if it's more likely to come down maybe you should trade it with size for example okay so you see where I'm going it it all has to do it there's a lot of things to to think about here did you have more questions here did I miss any of your questions uh can you predict the volume of a stock before market is yes I can you watch the volume pre-market time and you normally want to see over 30,000 shares pre-market time like one hour before the trading session is open and when the trading session open you kind of want to see more than 40, 50,000 shares I cannot predict I can't predict it but I can definitely I can definitely hope to see it I when I see a lot of volume I can I can I can believe that it's likely to have a lot of volume Yogi you're giving us money seriously we're supposed to be paying you on YouTube Yogi probably aimed too much today depending on the time of stock your follow market on sector okay that's a complicated answer here Mark but yes of course you could definitely depending on the way you trade you can definitely prefer some sectors some some stocks that you like trade better or so on but that's you know I could get into this for an hour right now but the answer is yes I do prefer but it depends on the gap if it's a big gap like over five percent I would disregard the sector no I would not disregard the sector like if it's going to be a crypto company or something like that different issue if it's a Chinese company sometimes different issue if it's a big company like you don't want to see let's say IBM gets down five percent it's not the same as ANF does that uh more people would like to buy IBM for the long term so when IBM gaps down five percent well I'll be careful because you know it could just gap and close and move I'll when ANF gaps down it's a big company yet but it's not IBM it's not Facebook okay it's not Apple I hope I answered your question I'm not sure if I missed more questions though okay let me just continue do you lose gainers and losers to find the stockiest exactly exactly what I'm using okay so where was I what did I want to tell you we went into this summer right oh yeah I was trying to figure out okay we talked about the entry point the entry point was right over here 35.50.We're talking about
shorting it at 35.50 and the next question for you is where would be my stop loss where's my stop loss do you have any number I mean just okay let me put some lines here this line is 36.50. I'll put another line okay the high of the day 36.93 approximately okay this reversal over here is 36.17
and I'll add another line I want you to write down a number if you didn't get my meaning I want you to write down the number where would be your stop-loss assuming you're gonna show it under 35.50 where's your stop-loss please write down the number FIBO you're looking from the point of the from the low to the high of the recent move so from 35.10 to 36.51 a cent of the high right down the numbers the cent over the high the high is 36.93 so if you want to write down cent over the highs that will be 36.94 so we've got some numbers here 37 Simon said 36 and a half 36 and a half 36 enough Tim 36 says George it's 36.51 I like the 51. I'm not saying in the right place I'm just saying I like the one over the semi-whole number it's always very useful that's the right point so Mark if you're writing 36.50 always add another cent
because the semi whole number could help you 36.50 always 36.51 would be your stop 36.93 and uh in YouTube 36.60 36.51 36.90 okay now it has nothing to do with your risk reward let me start with that you could base your risk award after you decide where would be your stop-loss point in my opinion your stop-loss point should be 36.17. do we have a winner 36.17
21 you'll close I would regard you as a winner yeah you're my winner 36.21 he says because it's exactly the same it's quite the same 36.17 okay let me uh uh erase the lines here I will just leave the line where I think stop should be oh sorry I wanted to where's my entry point so that's my entry point and my stop-loss would be like once entire over here okay so in my opinion entry point 35.50 and stop loss 36.17 that makes it 67 stop loss or 68 or 70 stops or whatever why would this be my stop-loss this would be my stop-loss because this is in in my opinion the point of no return that's the point of no return hold on a second okay why would I call it the point of no return I would call it the point of no return because I just have to imagine that in my mind let's let's let's do the imagination game here and i need you to be very very imaginative I need you to imagine you know when you're a trader it's not all about it's not all about you know why did I paint this line now it's not all about uh the technicals it's not all about technically speaking it's a lot about your imagination seriously it's a lot about your imagination you move into a stock the next thing you need to do is imagine the stop loss and what do I mean about imagine the stop loss look at the point of your entry and start thinking about the failure okay so it moved down a bit and then close to the lows you didn't take your partial yet it stopped and started moving higher started moving higher please imagine that and I want you to think about the point in which the stock as it moves higher in your imagination as it moves higher is at the point of no return think about the point where the stock is looking higher and it just you just look at it at some point at some price and you say goodness it's not going to return it's done with it's it's going to move higher now that's it finished I'm lost I'm it's going to continue over the highs or maybe it's going to close the gap or whatever just look at that point try to imagine the point of no return of course you could be wrong but mostly will be right you know I don't know if you play some kind of sports or you do those different things that when where you have to activate your imagination like if you're playing golf you can't succeed in playing golf without imagining the way the ball is going to move and land right into the hole I mean you imagine the way it flies you imagine the way it gets when you when you hit it you just imagine where it goes if you don't use your imagination you will never be a good golf player so when you're hitting the ball and you're imagining and then your body follows and everything becomes very clear and very you know intuitive you just do what you think you're doing so the imagination in trading is extremely important it's not just technicals it's not that if you're a good mathematician you're going to succeed in trading if you know about the economics you will succeed about in trading in fact I guarantee you if that's the only thing you know if you're great in mathematics or great economics I guarantee you that you're gonna lose money okay you you need to use your imagination that's why I normally say that you know trading is somewhere in between exact science and art really seriously you need your artistic part and your artistic partner is really your imagination I want you to start thinking if the stock is moving higher what will happen what would be the point of no return I want you to take a look at the chart build the chart in your mind watch the way to move higher and once it get to that point I want you to think okay so now it's at 36.17. is there any chance it's going to come down now if you're not sure ask it seriously ask the stock don't you probably think I need to be hospitalized now seriously I'm not joking just ask it what do you want to do ANF what do you want to do you were 36.17 i thought you're gonna break down under those what do you want to go 36.17 and then ANF is going to think a little bit and it's going to tell you well
tell you what Meir is going to tell me I think i want to go up I'm not I'm not coming back down no not coming back down anymore you see what I mean ask it's not gonna answer unless you really need to get this hospitalized but just imagine your answer just imagine what's going to happen once the stock gets to 36.17 if it gets there it's just crying I don't want to come back or maybe there will be a chance of 30% it will come back or 40% it will come back it's good enough for you to exit the trade when you get to the point of in your imagination no return that's the point of your stop now please forget about everything you've been taught with some whoever taught you day trading stop over the highs stop at the reversal point stop at the technical stop sometimes it is a technical stop I'm not saying it's not sometimes a technical stop and sometimes it is over the high sometimes the point of no return the point where ANF will tell you I don't want to come back down that would be the high just imagine the way it moves higher maybe it could have been near the high but it's not in the case of ANF some other stocks it could be and sometimes it's over the highs so i want you to use your imagination think where is the point of no return just forget about high of the day five minute reversals and everything it's sometimes it is there okay but it's your your your point of no return is what's important your imagination is what important your in intuition is what's important use your intuition if you're a trader if you don't use your intuition you're just not gonna make it you're just not gonna make it that's it okay so that would be your stop loss so if you have a 70 cent stop loss where would be your target not getting to a lesson of risk reward here we're not getting into this point right now uh it depends on your risk reward like if you always call this one to one then you need to think about 70 cent target if your risk reward is one to two then you need to uh believe that it can do a little bit more actually this one did one two three depending on where is your stop if you got the right stop you can have an easier target if you believe that 70 cents is the right stop loss then your target doesn't matter if it's one to one or one to two or one to three is easier to reach your chance to succeed is better I hope you get my meaning more questions here at what point you think the stock is going the wrong way we just discussed that if it was 36.50 for this specific trade I would okay we talked about it when mentors is it good you think the stop loss or if it's level where things get worse for your trade that's exactly what we talked about saying I believe i believe I answered your question I would imagine formula formation using the first false candle first false gather you know again you now look you're getting into very technically you're looking okay the first four scandal you see you're getting a little bit too technical for me here you get my meaning just imagine the point of no return in my opinion okay that's it yesterday my server trade I think I remember I remember how I made twenty five thousand dollars yesterday seriously I think I remember that I wanted to ask I'm just joking I wanted to ask you a question about your stop-loss well not now sorry I mean can go back to this one the faster the failure the better the moving down yeah I guess how do you decide the size of your trade okay as I said earlier it has to do with um market direction for example does the market helps me how big is the gap is it a three percent gap seven percent gap eleven percent gap as ANF in the case of ANF I doubled down as it moved under the lows I really love this trade and it worth it so size of my trade it's you know it has to start somewhere I mean does how much you can risk per trade and so on and how much you can I would normally suggest people to have a max loss sum that would be your initial size and then you could double down that so if you have a max loss of let's say $100 you're at some points if you really, really like the trade and I'm not getting into should you like this one or other one but it depends on the trade not all trades are created equally then you could double down and that's exactly what I did today what causes gaps when the market is closed most of the most most of the announcements come pre-market or after market time Adam so when the company has an announcement it will always do it pre-market time or after market so pre-market two hours before they just publish their annual report or something like that it will always be not during market hours unless some something comes out during market hours and they have to disclose it if you stopped out and continues coming down would you re-enter good point sometimes I do re-enter it happened to me yesterday modern I think uh that would be real that would be real I could be if I'm stopped out and let's say I'm i have a stop at 36.17 it moved up another two cents and then it came down yeah I could I could enter but if it moves up higher than that I think I won't but again it depends on the trade the answer is yes i could uh do you consider ATR yes ATR is very important you should be using ATR but you know when you look at ANF with a big gap down you look at the first few minutes you don't need the atr you look at the chart you know the ATR you don't you don't really need it sometimes when you're not sure definitely use the ATR how do you decide when to add too many trades as I mentioned earlier some trades are just looking better much better depends on the market direction depends on the straight depends on the how big is the gap depends on how the volume is so you need to come out with everything together to me again it's very intuitive I watch the chart I want this volume i don't even think about okay high volume okay dodgy okay then it's just embedded in my mind i'm training for 20 hour one years when I look at the chart when i look at the chart I see the matrix I'm not joking I see the matrix what you look at the chart and you look at buyers, sellers, bid, ask Fibonacci's, VWAPs ,volume and you start analysing this I don't I see the matrix okay I look at everything it's like I don't have to analyse everything it's just like I look at it and I know what's going on I'm not joking I'm not joking I'm serious about it I see the matrix and then I'm not the only one I'm not the only one okay okay so yeah we talked about your target as well there's one more example I'm sorry if I didn't ask I answered only a question I'm telling you sorry but we're probably not going to have the time for this we have to end it sometime so let me just move to my last trade i want to discuss today which is RIDE we had a nice ride in RIDE and here is what happened RIDE was posted in the trading one of you guys posted it today it wasn't my pick i didn't see it pre-market time because I'm not watching stocks under ten dollars sometimes it is a mistake it's a very rare occasion where i would trade this talk like right it had 30 million shares in volume where I moved in it was posted in the room where it was approximately at seven then popped up to the highs and then pulled back and i said well you know I already have three winners how about risking my money with another one so I posted it in the room for a long over 7.05 if i remember correctly and then we moved in right over here and wow look at that huge move up so what the issue is with right is exactly the opposite we talked about earlier with about stocks which are gaping uh which are gapping down which are gapping down in a big way and then continue to come down that's a gap and go now we're talking about a gap and go long which is exactly the same idea just the stock starts with a big gap up this one over 20% the bigger the better start with a big gap up and then it moves up and then the sellers start coming in profit taking whatever again we're gonna analyse everything but just remember this you look for a technical formation so if stock just moves up and up and up and up and up you're not joining it and there's several stocks that behave this way okay you just don't join something that looks like that and then it continue to come up you don't have a technical information to go long then you wait for the sellers to come and then they come and then they give you some kind of a reversal technical reversal probably we could have moved in a little bit earlier but you know it was just posted in the room when it was around here 7.12. so anyway waiting for reversal going long and that's exactly the opposite it just goes higher now please understand these big moves gap and goals are not initiated by institutional traders they are not they will not be in a trade that moves from 6.60 to 7.70 they are not there they are not playing this game this game is for traders
for investors for people like us for people who appreciate the volatility appreciate the trend institutional traders cannot participate in that because it's moving too fast for them it's it they they cannot participate they need to wait for pullback buy get commission it goes up some of them are selling some of them are buying they're not getting into the crazy games and again it popped up more than three percent so it's on hold so now they're having a meeting in a day in a week in a month whenever so they're not in the game it's mainly about us and when stock is moving up that way just think what happened to GME to AMC to Tesla whatever to think about what happens when grid kicks in it's not as good as fear I personally would short more gap and goes and go long that's why I had three gap and go shows today and one gap and go long today so you know that's that's really uh that's really the way I trade I really personally prefer I really personally prefer to go for the for the sorry for the get go shot sorry um if you're wondering how i finished today if you didn't see my recap when we started training today here's all of my trades today three of them are for the short side and one of them is for the long ride I also had some right some quantity riding after closed when I closed the training session today I was up 27 grand and it continued to ride some of them and just finished 32,000 in profit today gap and go strategy all of this is just gap and go strategy and you're looking at my numbers and you and you're probably saying wow that's huge please remember trading is hard it's not as simple as it looks I'm very experienced my results are not typical and you know but even having tenth of what I did today is three still is three grand and having one hundredths of what I did today with extremely low size it still is three hundred dollars and who makes three hundred dollars in 30 minutes I'm at 30 grand in 30 minutes but 300 in 30 minutes if you're taking it with extremely low size compared to mine that should be a good day right that should be a good day so again forget about my results just look at the fact that there's a hundred percent I had today a hundred percent today it doesn't often comes this way I mean my average is 68% today I had 100 a good day exceptionally good day uh yeah i use a lot of leverage I definitely use a lot of leverage I'm very experienced i just don't need all of my cash to be in my account so I use a lot of leverage again not something that you guys should do how long did it take me to become profitable it took me approximately two years to start earning money you know on regular basis and then when I say starting earning money doesn't mean I was making more than minimum wage I stopped losing money and started earning money at approximately two years but until it became something interesting it probably was over three years yeah longest grid shortest fear absolutely that would be the best well traders sorry I couldn't answer all your questions but I really enjoyed this webinar and hope you did too it took a little bit more than I expected so I appreciate the fact that you were still here with me didn't fall asleep I hope it was interesting so thank you guys for participating it was really nice to have you around and um let's do it more and um have a good night have a good day and I'll see you all in the trading home tomorrow thank you for participating again and if you're on YouTube and you didn't give us a thumb up that's the time I guess right i mean did we earn it today please do that thank you guys bye. Sure do appreciate it Meir. Thank you so much great lesson today thank you to everybody on YouTube as Meir thanks for smashing that thumbs up button we appreciate you and look forward to trading with you tomorrow I had a nice profitable day today tomorrow is a Friday looking in on the weekend we look deliver more of these here as we grow the channel so thank you again everybody for attending thank you for everybody here in the room and we'll have a great night tonight look forward to seeing everybody in the morning good night everybody thank you to Meir and the rest.
2021-09-01 00:44
