Rajandran R Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

Learnings about GAP up or GAP down

39 sec read

Just a 20 EMA mean reversion concept. Any trying to spot trading oppurtunities. If there is a GAP UP or GAP down in any kind of stock
just observe it using 5 minute charts and wait for the formation of minimum three candles i.e 15 minutes.

And if there is still huge Bandwidth GAP difference between the 20 EMA
and the spot price(atleast more than 4%) then more chances that the sentiment could vanish and and the stock or indices could move towards the EMA band. It may touch the EMA line either by moving sideways or trend reversal. Sample 3i-infotech charts are shown here for your reference.

You can place the stop loss order above the thrid candle high if you are going to short after 15 minutes of GAP UP or at the third candle’s close if you are going to long after 15 minutes of GAP Down.

And finally close the trade once it got mean reverted to the EMA bands.
i.e the gravitational rope

Chart 1

 
Chart 2

Chart 3

Stop Loss Hits in this Third Case which is your 3rd candle high

Chart 4

Chart 5

Rajandran R Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

How to Send Automated Orders from Tradingview to Algomojo…

This tutorial explores how to send automated orders from Tradingview using webhook method to Algomojo Trading Platform. Webhook is a unique way of communicating...
Rajandran R
2 min read

TradersKart – One Stop Shop for Traders

TradersKart offers One-Stop E-commerce Solution for all the traders, where traders will get access to their trading needs. Traderskart provides the necessary tools required...
Rajandran R
53 sec read

New Margin Framework for Options Trading and Market Outlook…

In this tutorial, we covered detailed indepth insights on the current market structure and the outlook for June 2020. Also New Margin Framework which...
Rajandran R
22 sec read

One Reply to “Learnings about GAP up or GAP down”

Leave a Reply

Get Notifications, Alerts on Market Updates, Trading Tools, Automation & More