Gap downs in Trading - What should I do when my stock is GAPPING DOWN?

Hi all !!
Hope you are doing well. This time I am going to discuss an interesting topic. If you are in the stock market for a quite decent time by now you would have been familiar with Gap Ups and Gap downs in trading.

While Gap up defines the underlying strength in the stock Gap downs define weakness.

Now when I say gap down I don't mean 1-2% gaps that occur randomly on charts. 1-2% Gaps either up or down does not signify anything (at least to me). I don’t give them too much importance. However, when gaps occur more than 3-4% then that signifies some serious weakness in the stock.

Such gap downs should never be ignored and if you are in that stock, you should move them immediately to sell the watchlist. Your stops should be tightened. At least your position size should be reduced.

In this article I will explain with examples, how gap downs look like in real market times and how one can save themselves from getting beaten out.

Read more...