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Stock Market: Gap Up and Gap Down? - YouTube
Channel: ClayTrader
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a stock gaps up but stock gaps down is
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this thing gonna be a gapper what are
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these people talking about I'm clay let
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me explain
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[Music]
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now before I can get into what a gap
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actually is a gap up a gap down
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let me just establish little context of
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how the market works and the way the
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stock market works is this is just gonna
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represent time so you have this whole
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time period right here and within this
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time period you have what I'll call you
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know the traditional market hours so
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from the eastern time perspective that
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is 9:30 a.m. again Eastern est and then
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4:00 p.m. Eastern
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so est and then again this is like I
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said this is when everybody usually
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trades that's kind of the quote call if
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the normal period of trading but that's
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not really the entire story because the
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other part that needs to be kept in mind
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is what's that mean from here to there
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and then from here to there so in kind
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of trading jargon this is what we would
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call pre market meaning it's wall pre
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before right before the market actually
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opens at 9:30 and then here it's kind of
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there as many terms out there after
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hours a post market but I'm just gonna
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call a post market right again post
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meaning after the market is closed and
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you have this period now what is this
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period well in this period you can still
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trade so you can still execute trades if
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you want to now that one little disclaim
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with that I'll put kind of a little
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asterisk here and the asterik down here
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being you need what's called a direct
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axis broker many brokers out there you
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know just write each trade I don't know
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if each trade allows pre or post market
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trading but a lot of the you know
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Charles Schwab fidelity those sorts of
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brokers they're not allowing you to
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actually partake in this pre or post
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market period of time they're only
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allowing you to take
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in the normal hours so that is how the
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market is broken down so again I can see
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the question right now well how do i how
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do I get axed to this well you would
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need a direct access broker the one I
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use is light speed for example
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Interactive Brokers and then there's
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other ones out there but that would be
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the key some sort of Direct Taxes broker
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so how does this all actually pertain to
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gap ups
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well the way a gap up works is at right
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here and I'm just going to make this up
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let's let's talk about stock and I'm
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gonna get real creative here ABC okay so
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ABC at that point let's just say the
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closing price is $10 so $10 closing
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price it just ends but then during this
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period of time in the after-hours the
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post market bad news comes out for that
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company really bad news now people that
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are able to you know trade this and
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still to partake oh wow that's bad news
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I want out I want out I want out so
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people are gonna be selling so that
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means the next day when we come back
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around here to the normal market hour
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because people were you know selling and
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getting out what does that do well that
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would create a gap down meaning the
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price closed now I'll come right up here
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at 10 so that was the closed well
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because of that bad news that happened
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in after hours and then pre market
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people are selling so therefore the
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price is gonna open up and let's just
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say $9.50 that means it was a gap down
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because the price was up here and now
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it's only worth 950 hence a gap down now
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gap downs can occur for many other
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reasons our earnings just random news
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but in this case you know I just say
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something bad came out about it on the
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flip side though and maybe see where I'm
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headed with this let's say that again it
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closes at 10 so a $10 close but then
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good news comes out some sort of good
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news happens after 4:00 p.m. so maybe at
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like 402 the market closes boom good
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news comes out well now a bunch of
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people that are able to trade in post
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market and pre market are gonna want to
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buy so all those people are buying which
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means by the time
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it comes back to the open right here
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again now all of a sudden it's that you
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know $11 and let's just say 50 cents
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open so in that situation will it happen
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it closed at 10:00 it's open at 11:50
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that means it's gapping up in price that
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would be a gapper now cappers can
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obviously be a cap or down or a gap or
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up but as far as what a gap up or a gap
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down is concerned that's what that is
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all it means is what did a price close
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that from the official close of the
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market and then what does it open it up
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at the you know the official opened the
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next day and that's going to determine
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whether it's a gap up or gap down and
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then of course what determines the
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actual gap in nature is everything
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that's occurring in post market and pre
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market so the next time you hear
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somebody about saying oh wow it's
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gapping up or it's gonna gap up that's
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just because all these external things
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are going on outside of those normal
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hours and that's what's causing that
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within normal hours nothing can gap up
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or down because everything is is trading
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a gap can only occur from a closing
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price and a closing price it only occurs
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every day at 4:00 p.m. Eastern Time so
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that is what a gapper is that's how it
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works so next time you hear a gap up or
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a gap down you now understand these are
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all the dynamics at work first off
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thanks so much for watching the entire
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video real quick before you go I want to
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invite you to a live webinar web class
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training workshop online event whatever
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you want to call it but it will be me
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live revealing to you what I discovered
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that has allowed me to transform myself
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from being an employee to being my own
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boss
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including how I had only one losing day
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out of 73 days in total I'm going to
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cover three keys that have helped me
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unlock profitable consistency within the
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markets the first key is super-weird but
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in a productive type of way the second
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key is super awesome because it quite
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literally is wired into our DNA as
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humans making it very easy to use but in
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a cruel way this becomes a pitfall for
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many traders I'll explain it all though
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including how to avoid the pitfall that
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it creates for some and yeah the third
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key when you hear it sounds way to get
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way too good to be true but it's not and
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I'll show you how it all works then at
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the end I open it up for a
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question-and-answer session that is
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again totally live even if you can't
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make the live session please
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still sign up as it will be recorded and
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you can go back and watch the replay
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then I will send you click the image on
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the screen or click the link down in the
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description box so you can get the date
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and time and claim your spot which I
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should know is limited due to the fact
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that this truly is a live event if you
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have any questions let me know if not
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I'll be seeing you soon
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