Introduction to Gap and Go
Hello traders, Ross Cameron here! Today, I want to share my insights on one of the most dynamic and high-powered trading strategies I use in the stock market – the Gap and Go setup. Right off the bat, let’s dive into what this strategy is all about. Picture this: the market’s about to open, and there’s a stock that’s gapping up from the previous day’s close. There seems to be a buzz around it; maybe there was a positive earnings report or some big company news. For many traders, this signals an opportunity, and for me, it’s a chance to potentially lock in profits early in the trading day.
Finding the Right Stocks
My journey every trading day starts even before the opening bell. I scan pre-market action, looking for those gems that are ripe for the Gap and Go. I’m on the hunt for stocks that have significant volume and are gapping up by a good margin. These are the stocks that can carry momentum once the market opens, and that’s exactly what I need for a successful trade. It’s not a simple task; it requires a lot of research and a keen eye for patterns that indicate a stock’s likely trajectory once the trading begins in earnest.
Setting up for Success
Once I’ve identified a potential Gap and Go stock, the next step is crucial. Setting up my entry. I’m watching the level 2 data and the time and sales to gauge the buying and selling pressure. I’m looking for the right moment to enter, which is usually on a pullback or consolidation near the pre-market highs. I’m setting my stop loss carefully, knowing where I’m going to cut losses if the trade goes against me. Risk management is vital here; a controlled approach is what separates the seasoned trader from the rest.
Execution of the Trade
The opening bell is a siren call for traders like me. When it comes to executing the Gap and Go, timing is everything. I’m looking for a strong opening price action, followed by the stock holding the gap. As it starts to move, that’s my cue. I enter the trade with precision, buying with the intention to sell quickly—often within minutes—as the stock ascends. This might sound straightforward, but it requires focus, fast reflexes, and a disciplined adherence to the strategy.
Reflections and Adaptations
After the trade, win or lose, reflection is a vital part of my process. I review what went right, what went wrong, and how I can improve my strategy for the next trade. The market is always changing, and as a trader, I need to adapt. I keep my strategy simple, but I’m always fine-tuning it in response to changing market conditions. Adaptability and resilience, that’s what keeps me going and what can make all the difference in trading.
In closing, the Gap and Go strategy is not for the faint of heart. It’s fast, it’s intense, but for those willing to put in the work, it can be incredibly rewarding. Remember, success in trading comes from knowledge, practice, and a lot of patience. Stay diligent, stay learning, and let’s keep chasing those gains, one gap at a time. Happy trading!
Stay Social
Warrior Trading was founded by Ross Cameron in 2012 and is now a thriving community of thousands of traders. You can learn more about Ross here.
You can follow Ross on Twitter here. Also, check out Ross’s blog posts on Entrepreneur.