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Trade The Open Like A Boss! Part 21 * How To Trade Stocks That Gap Open - YouTube
Channel: Oliver Velez Trading
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good morning traders the market has
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opened and I immediately see that Apple
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has experienced a small gap to the
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upside it is trading above its 200-day
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moving average and yesterday's in late
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day price data this has some interest
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for me I am NOT gonna rush into a
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position I'll wait for a good two
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minutes to pass by which is something
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that I strongly encourage my traders to
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do now there's something I want to point
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out to you when a stock gaps to the
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upside or downside I encourage traders
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to fill the gap in let me show you
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exactly what I mean
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right now now as you can see clearly
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Apple is sitting above almost everything
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to the left this includes its 200 period
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moving average its 20-period moving
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average yesterday's closing price and of
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course yesterday's late day price data
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now when a stock gaps up I encourage my
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traders to mentally fill in the gap
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assume that the stock has actually
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traded to it's gapped open price versus
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having gaped there and this will give a
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clear indication of what the bias should
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be now as I fill the gap in you can see
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that it appears as though Apple has
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experienced a powerful surge that has
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broken through all forms of resistance
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this should lead to continued momentum
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to the upside so what I'll be doing is
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buying above the first two minute bars
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high and I'll be taking a position there
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with a stop underneath all four of these
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supportive items I don't want to get
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stopped out anywhere within this block
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of four items so my protective stop is
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going to be under everything these four
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items serve as significant support for
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the stock and in fact if after I
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purchase Apple above its first two
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minute high it pulls back toward these
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supportive items that is only going to
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be interpreted as another buy
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opportunity for me not anything to be
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concerned about so let's go and see how
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my opening position materializes so
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marked off the high here I'll take my
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initial position into the play I just
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grabbed five thousand six hundred shares
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above the high here and again I'm not
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overly concerned with any dip to the
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downside that two hundred period moving
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average serves as significant support
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and will only offer an opportunity for
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me to build my position even more should
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it dip down there happen but Apple is
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actually holding well in the upper
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portion of its range it's moving toward
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its high again I'll throw some orders
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into new high territory see if the
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market can move up into them it's moving
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up into those sell orders I'm reducing
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my position on every surge to the upside
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I'm down to thirty five hundred shares
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we'll see if an additional push can get
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me lower I'm now down to two thousand
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five hundred shares sixteen hundred
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shares again orders above the market if
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I can't get any additional push in the
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next few seconds I will kill this
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position right here close out my gains
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for about eleven hundred dollars in the
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first few minutes of trading and we're
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done this could drift higher here but
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I'm satisfied with this amount right now
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now notice what's just happened here
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I've made a mistake by not cancelling my
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open orders above the market and I
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mistakenly went short this happens at
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times and I encourage traders that if
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you're placing orders ahead of the
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market that you have to clear out those
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orders once the position is closed so I
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lost a tiny bit on that mistake here so
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I'm gonna continue to monitor Apple here
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I actually think it's getting a little
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bit ahead of itself and I think a
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pullback a shorter bow pullback is
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playable here it's distance away from
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the 200 period moving average leads me
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to believe that we could get a nice dip
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back at least halfway into its initial
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run so I'm gonna take a position here
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I'm now short almost 5,000 shares here
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nice quick pop here to the downside I'm
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looking to cover around that 50% mark as
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you can see and boom right here I've
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covered completely this short around
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that 50% mark and that has moved my
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gains to over $2,000 in the first 20
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it's of trading so now that we pull down
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to the 20-period moving average area
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i'ma try a pelant alongside I'm gonna
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see if the bounce can really be strong
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and powerful the mole to the downside
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was a bit steep so I'm not quite sure
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that the bounce is going to be very real
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so I'll see how it materializes and I
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see it struggling a little bit so what
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I'm going to do is I'm gonna come out of
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this position real it relatively quickly
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here I'm gonna come out about halfway up
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the red and take a small gain here if I
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can get it in a place orders a little
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bit above the market here into the range
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of that second red bar to the downside
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and I'm reducing my position and here we
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go I'm out now here's what I'll do
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because the move down was relatively
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sharp I'm gonna try to take up short
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position up near the prior high I'll
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keep a tight stop here and just test the
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market here I want to test to see if
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this if Apple's going to fail at its
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prior Hajus because the move down was a
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bit steep here so I'm gonna take a short
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position and see I'm not gonna go crazy
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with this I'm gonna have a tight stop
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into new high territory so there's my
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short position 2,100 shares
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let's see how this does see if a little
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get a little nudge to the downside that
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can push my gains toward the 3000 mark
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here let's see coming down boom I'm out
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here a little tiny wiggle to the
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downside I brought my gains very close
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to 3,000 mmm $2,900 or so and it looks
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like I was right maybe I've got out
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gotten out a little too prematurely here
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flirting with that prior high but let's
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see how Apple materializes there could
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be another push to the downside Apple is
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at a critical point it's got to move up
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here and it's got to move up here in a
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hurry because if it doesn't there's
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another move down and I think I'm gonna
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take another short position here it's
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struggling I can feel it struggling
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it's not gaining momentum I'm gonna take
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a short position here and see if there
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can be a move back toward that low
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here's my short position I'm short two
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thousand five hundred shares here let's
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see if we can get Apple pushing back
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toward the prior low down there
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I'll throw orders beneath me and have
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the market come into those orders if we
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can get this momentum to the downside it
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looks like we're getting it my orders
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are being filled here and boom I'm out
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of this short short position for three
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thousand three hundred and fifty two
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dollars inside of 45 minutes and ladies
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and gentlemen that's how we do it hi
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traders I hope that video was
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informative for you I want to take a
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moment out to address something that I
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receive in the comments of these videos
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quite frequently and it is regarding the
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topic of size a lot of traders say well
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Oliver you seem to have a relatively
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sizable account and you do five and six
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and seven thousand share positions of
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stocks like Apple and things of that
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nature and my accounts just not that
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size so I'm unable to do what you do and
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I think this is terribly wrong it's a
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very big big mistake to believe that
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size is a substitute for trading talent
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the purpose of these videos is to teach
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you some of the very same tactics and
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techniques that I share with my traders
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every single day of their lives and more
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importantly I try to put you into the
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mindset of a professional trader during
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each moment of a trade and I think those
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things have a far greater value than
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focusing on what size has to do with the
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trade now I'm not trying to say that
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size is not important size has its place
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but here from an educational point of
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view it's the tactic and the technique
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that I'd rather have you focus on so
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whether you imagine the gain is $5,000
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or $500 or $50 is really not the point
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the comma and the decimal point is not
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really the focus here so what I'm really
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trying to say is this consider this the
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same actions that is required to make
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$50 can make $500 with slightly more
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size the same exact actions that produce
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the $50 for the $500 can produce
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potentially a $5,000 game with slightly
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more size so yes size has a factor on
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the amount of profitability but it
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rarely has a factor on the action itself
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it's right action that is the focus here
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the size is going to come for you I
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promise you you focus on right action
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focus on correct technique focus on
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professional moves in the market and
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your size will come so I just felt that
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it was important to make a comment about
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the size don't get hung up on the
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decimal places don't get hung up on the
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commas focus on the right action the
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right technique and Jojo perfectly well
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until the next video I want you to trade
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well and be on the lookout for our live
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sessions each and every Friday
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[Music]
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