Gap up

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jarrichards@icloud.com
Nov 05, 2021 07:07 AM 0 Answers
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Hey Marty,

 

I see the gap ups also what is your advice? What is your stop and buy points?

 

Thank you,

 

JR

JR

Great Question!

Many folks are buying these earnings gaps out of bases as there have been quite a few this earnings season.  The entry point is critical. We always use a 5% stop loss. The exception would be if you had an entry point LESS than 5% of the low. We can never allow an earnings gap to make a lower low from the first days candle. If the stock follows through (as many are doing now) then you place your stop loss at the low of the second day. We continue that process until the stock makes a lower low and we get stopped out with a winning trade.

This is a strategy for swing traders and we are only trying to capture a few percentage points. Sometimes, these earnings gaps lead to larger gains though. I created a video this week to clarify the process.

I hope this answers your question!

Regards,

Marty

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