Day Trading Gappers Strategy Overview

What's up everyone? All right, so today I'm going to talk about trying to find stocks to trade. One of the biggest challenges with being a day trader is finding something to trade. There are thousands and thousands of stocks and you can go on Reddit, you can go on forums, you could go in chat rooms, you could find... stocks a million different ways. And I have found a way that for me works really well. And so what I'm going to do here is I'm just going to cut through all the kind of baloney. You guys know who I am. I don't need to tell you about me. I don't need to tell you about why I'm credible. If you want to see my broker statements, you can actually... actually see them on my website, warriortrading.com, I'm just going to tell you about this strategy, which is day trading gappers. So one of the challenges, of course, with learning how to trade is finding stocks to trade. One of the other challenges is finding credible information that's useful, helpful, and helps you grow as a trader. So what I want to show you here is a perfect example of trading gappers. So this is the topic for today. It's an excerpt straight from the Warrior Pro... pro courses. Obviously, I teach classes over at Warrior Trading. We'd love to have you guys join us. If you want to learn more, come over to warriortrading.com slash strategy. There's a special page there that's specifically for you guys checking out this episode here on Trading Gappers. So let's go ahead and jump in. But before I do, I'll remind you as always that trading is risky in case you didn't already know that and my results are not typical. So you should not assume that you will achieve the same or similar results as me and you should not try to blindly follow me or anyone else. you've got to learn the strategy and ultimately that's the biggest challenge with getting started trading finding a strategy a system of where am i going to find stocks to trade and then once i find them where am i going to get in where am i going to get out etc and that's what i teach in the warrior pro class so um this right here is um chapter um chapter seven gap and go trading now gap and go trading is a fairly long chapter it has several parts let's see see, I can jump forward to it. Let's see what chapter is this. This is chapter eight. By the way, this slide deck is over a thousand slides. So it's, it's pretty packed. But so here's chapter seven gap and go. So this is, we're going to be kind of getting into some of the basics here. Now I'm going to talk about the process of reviewing the gap scanners, but before I get in that far, let's just step back for a second and let's look at this chart. Okay. So what are we looking at here? Let's get oriented. What we're looking at is the gap scanners. So let's look at the gap looking at is a stock that right now at this very moment is up 225%. I'm up $77,999.99 on it, which is a terrific green day. Okay. It's got 111 million shares of volume. You can see that right there. So those are the number of shares that have traded hands and it's a NASDAQ stock. It's listed on NASDAQ. It's not listed on the American exchange or NYSE or on the OTC exchange. Thank you. all right well is there any inclination that this stock was going to make this huge move from 12 all the way up to a high of 28.83 will mark out the high right there well you know why don't we clear all of our lines and kind of just get back to basics keep this really simple i'm not gonna in this video break down the nuances of drawing trend lines and things like that we cover all of that extensively in the classes i also have other videos on youtube here and there where i hint and sort of talk about the process of drawing these lines so i'm not going to go into that right now but what you can see is a fairly clean and fairly simple chart i have volume bars i have some moving averages i have the volume weight average price this morning indp was gapping up 67 what does it mean for a stock to gap up does anyone know it means that it's going to open today higher than it closed yesterday so yesterday the stock stock closed at about $7 and this morning it opened at $11.85 representing an impressive 67% gap on the daily chart. So the word gap comes from the fact that this chart, which is a daily chart, has this big gap right here. All right. So that's the gap. Maybe it's, oh, it's actually from about $7.05. In any case. So that's our gap on the daily chart. So this stock was gapping up. Yesterday it traded on approximately 170,000 shares of volume, and today is trading on 1,310 times relative volume, with total volume of now 112 million shares. How does the stock go from 170,000 shares one day to 112 the next day? News. So this stock did have breaking news this morning, which... Of course, is what typically creates a gap. So the stock had news. You can see it out at 7 a.m. right here. And I'm not a fundamental trader. I'm not really dissecting the quality of the catalyst. There are times where we'll see a headline that sounds really great. You know, a stock has like FDA approval for, you know, a nasal spray for treating migraines. And then the stock drops 25%. And you're like, how is this possible? This seems like great news. So I try not to over analyze the news and I just recognize that there is news and if the stock is moving up then clearly the market is responding positively to the news. So I guess the news is good. That means I'm a technical trader. I focus on the technicals more than the fundamentals. So this is the chart right here. The stock started squeezing up at 7 a.m. as soon as the news came out and it actually squeezed from $7.50 up to $10 briefly. It pulled back and then it rallied up to $10.50. it pulled back and then it rallied up to a high of $12.87. And there were certainly some traders who were trading it early in the morning, who maybe sat down on the early side and saw that this was an opportunity. How would they have seen it? How would they have known the stock was moving? Right here. This right here is actually software that I developed for my students, and I use it myself. We all use it. And this software scans the entire stock market for stocks that are gapping up. So right here we have it sorted by the leading gapper. So every student who's in our Warrior Pro classes in the part of the curriculum and part of the community, when you log in each morning you can log into the chat room, you can see me trading, and you can also see this gap scanner. So this is our small cap top gappers. And you can see there were a number of gappers today. I look at something at minimum up five percent. If it's up at least five percent that's to me statistically significant. But we also look for stocks down more than 5% because sometimes those present opportunities either to short it or for a gap down reversal. But I'm going to focus primarily here on the leading gapper. So each day when I sit down, I'm usually looking at the top five leading gappers. The leading gapper is the one that's up the most. And sometimes it's a stock that's like, you know, 60, 70 cents. It's too cheap. I don't really want to trade it. I don't really get into trading penny stocks. Sometimes it's a stock that's too expensive. It's $100 a share. Now that's not as common because for a $100 share stock to be gapping up 60, 70%, I mean, that's a huge gap at a high price. For us, like a $2 stock opening at $4, that's already a 100% gap. So it happens a lot faster on lower price names. And so what I do... To begin with is I review the scan. So if we pull this back up here, the process of reviewing the gap scanner. All right. So, and these are some examples. These are some case studies of gappers that I traded. This was one, $40,000 on Pixie. So Pixie on this day was the leading gapper. It was gapping up 78%, had a 300,000 share float, which I'll explain in a second, 1.8 million shares of volume and a catalyst related to COVID. So that was one of the ones I traded, $40,000 on Pixie. Another case study here, MDGS on the morning scans, leading gapper, took some trades on that, $7,000. A POP, second leading gapper. So on this particular day, the leading gapper had a float of 1.1 billion shares, ACB. That's a very, very large float. So let's talk about that for a second. The process of reviewing the gap scanner. Initially, I look at the percentage gap. If our biggest gap around the day is only like 5 or 8%, then we don't really have anything that's super big. So that's kind of disappointing. Usually, I like to see something at least 20%, if not higher. Why, just as a quick tangent, it's significant for me to even be approaching trading in this fashion. I'm going to pull up some metrics here. Again, this isn't a like brag or anything like that I'm simply doing this to show you why what I'm saying is credible so this is about nine point five million dollars in gross profit and we're gonna look at instrument down here and let's see so performance by instrument movement is the majority on stocks that are over 10% and performance by the instruments opening gap So of 9 million, 9.5, 8.8 million is on a stock gapping up over 2%. So I make the majority of my profits trading stocks that are gapping up. That's why it's important if you're thinking about learning how to trade momentum. that you understand how to use a gap scanner and how to trade gappers. So the process of reviewing the scan begins initially just with looking at how big the gaps are. And in this case, we've got a couple of big gaps. INDP was the leader. Now, I might already be familiar with that stock. I can click on it and bring up some more detailed info on it over at warriortrading.com. You could also search right here. and bring up info on it if you wanted to. So we know we have news this morning 7 a.m. and that's I suppose you could see the news. If we go back over here the float is 1.6 million shares. Now this is important. So if you haven't already watched any of my videos on float I have videos where I do a full definition of float and all the ways that float can change and everything else. But just in very brief summary here, just to save you the time, float refers to the number of shares available to trade. So when a company does an initial public offering, they sell shares onto the open market. And then from that point forward, that becomes the float. So if a company sells 2 million shares at $5 a share, they'll raise $10 million in their IPO. Right? And from that point forward, there's 2 million shares available to trade. So if you wanted to buy, I guess the whole company, you would buy 2 million shares. Now, that's not always exactly true because sometimes companies will have larger blocks of shares that are a different class. So you wouldn't necessarily be able to buy the whole company by buying those 2 million, but that's getting more detailed that is important. What's important for right now is understanding that the float represents the level of supply. So this is coming into a very simple supply-demand equation. If you have a stock that is in very hot demand, as IDNP, INDP was today, then the low supply creates an imbalance, and that's when you get a really big move in stock price. Obviously, on GameStop, there was a huge imbalance between supply and demand. The float on GameStop is a bit higher. Hey, girl! Pull it together, girl! Showing right now at 46. million shares, but still relatively low compared to a company perhaps like Bank of America, which has 7.5 billion shares. 7.5 billion shares. Remember, 1 billion is 1,000 millions. So a company like INDP is 1 7,000th as big in terms of its float as Bank of America. It's a tiny, itty-bitty company. And this itty bitty company, how is it possible that it could go up so much? I mean, you wouldn't think that maybe it could because it's such a small company. And it again comes back to supply and demand. The shares of the stock are trading higher today on news. There are not a whole lot of sellers on this stock. And there are buyers and people are buying it and they're excited about it. And this is the definition of momentum trading. So the trading gappers, I call it the gap and go strategy. Gap up, go up. Now these stocks can be volatile in both directions. A gap up is not a guarantee that they'll go higher. MOSY is an example of one today that did gap up and then sold off at the open. So what's different about these two? MOSY was the fourth leading gapper. Well both were worth keeping on watch and MOSY was worth in fact even trading right through this area here as it was breaking new. highs as it made new highs. At the open, it wasn't worth trading here until it broke over 680. So one of the setups that I like to trade is the break of the pre-market high. So through the gap and go, the full chapter in our classes, I talk about taking the first and second pullback. And we have a bunch of examples of that. We also have live trading archives. Then I've got taking the break of the pre-market highs. So this is the one that I'm looking at right now, break of the pre-market high. So in this case, we didn't get a break of the pre-market high on MOSY. Over on INDP, we did get a break of the pre-market high. We got a pretty phenomenal break of the pre-market high. It was really spectacular right here. Okay, so that was the critical level that needed to break on MOSY that didn't. And I think the fact that we had something else that was so strong, This became the one that was really in focus and you know there's only so many traders out there and they can only focus on so many stocks at the same time. So ultimately whichever one is the best one becomes the one that people focus on and people are trading. And so today that was IN. Alright, so we start by looking at the gap scan. We then check the stock to see that there is news. Sometimes we'll have a stock on the gap scan and there's no news. And that's a little confusing because we don't fully understand why it's gapping up so much. However, simply the fact that it's up becomes a bit of its own catalyst, especially if it is one of the top five or ten leading gappers in the entire market. So no news isn't necessarily a deal breaker. I checked the volume today, but not with a lot of focus on that. More than anything, I look at the chart and I look at the float. If I see the float is 125 million shares or 89 million or 100, these are in white, which is a way of me kind of disregarding them. Not really usually going to be very interested in those stocks. Under 50 million is better. Under 25 is better. Under 10 is better. Under 5 is better. The lower the float, the more parabolic we see. Now it's not always true because GameStop was probably one of the most parabolic over a multi-day period, but what's more common is that lower float stocks, when they have a good catalyst, have a sharp imbalance in supply and demand that results in a really big move. So focusing on leading gapper and today this one had a 1.61 million share flow, very low flow. There are some more metrics here that we can look at, but we're going to focus primarily on the percentage gap the price of the stock and the float i do typically trade lower price stocks a little bit better than higher price stocks when we start to get into the price range of gosh like over 50 that's when things can start to get a little sloppy for me i probably have some metrics here yeah so here we have some metrics of profitability based on price So, you know, we start to get a little higher price and, well, GameStop kind of changed the metrics on that for me because I did really well on it. But in any case, I do better between 5 and, well, I guess you'd say between 2 and 20 would kind of be my sweet spot. So generally, anytime a stock is on the gap scanner and it's between 2 and 20, I'm going to be pretty interested in it. And so in the case of INDP, on the gap scanner, moving up, the chart looks good. which means it's above the volume weight average price it's generally consolidating sideways and the logical breakout spot here based on setup number two break of the pre-market highs again i have a number of different setups that i trade this one also actually gave us a red to green move right here it dipped down and then broke out and we could also even call it an opening range breakout it was over 1250 and it ripped up to 1348 and got halted on a circuit breaker If you don't know what that is, again, that's something we talk about extensively in the classes. You can check out some of my other videos on YouTube if you want to look for it there. Anyways, it gaps, squeezes up, halts, opens higher, dips down, rips up to 15. And so we have a couple of nice trades here. One is right here for the break at 12.50, which was to anticipate the break through the pre-market high of 12.86. Alternatively, an entry at 12.86 would have been fine, but a little extended on the one-minute chart. It goes up to $13.48, which is an opportunity either to take profit or to hold for a bigger move. It goes up then to $14.18, dips down, first one-minute candle to make a new high right here, the first pullback, breakout, up to $15. And that's back to setup number one. Even if you just took those two trades, you do not want to overstay your welcome. Being a trader is not about taking 100 trades a day. It's about managing your risk. And if you can take a couple of trades, one or two really good trades each day, by focusing on high quality, you're going to have a higher percentage of success. If you focus on just, you know, kind of hitting, trying to trade everything that's moving, your accuracy is going to drop. And it's really not a good way to approach trading because every trade you take carries risk. So the biggest way that I mitigate risk is by finding a strong stock to trade, and it starts right here with Gap Scanner. Then I try to find the best entries. And then I try to remind myself not to overstay my welcome. To trade it as aggressively as I can, but to know when to walk away. Today I was up $103,000 and I gave back about $15,000 off the top and that was my cue to walk away. I gave back profit off the top. I gave back $10,000 on this red candle right here. Right there. And then I actually added back right here. I made back the $10,000 I lost. And then I lost $10,000 again right here. And at that point I said, you know what? I haven't made any money since right here. Maybe it's time to just throw in the towel and stop trading. Now we did end up having more opportunities later in the day on this later in the morning, but not without some false breakouts and some choppiness. So, you know, I'm sure there's people that traded all day long that made more than me. I'm sure there's people who traded all day long that made less than me. It's not a competition to see how much you can make or how much you could lose. If you can get green and you can shut it down, you're actually going to be doing something that the majority of traders haven't figured out how to do consistently. And it starts by knowing how to find strong stocks to trade. And for me, the gap scanner is the go-to place. Again, just to emphasize, I know you guys have, you know, there's a million people out there talking about trading and trying to teach you things about trading. One of the biggest challenges that I found when I was getting started is how to find credible information. I want to learn. Just cut through all the nonsense, all the baloney. Just get straight to credible, valuable information that's got some. You know, proof that it actually works. Because a lot of people, they talk a big game, but then there's no proof. You guys can see the broker statements on my website. You can see that my profits are real. And those are based on trading, gapping stocks, just like this, the majority of the time. And if you want to keep learning, if you want to learn my whole strategy, I am happy to teach it to you. That's what I do over at Warrior Trading. And you can check it out. Come over to warriortrading.com slash strategy. Again, this is just an excerpt from... chapter 7 of the Warrior Pro classes. It's a short one, a short excerpt, because this is just by itself a fairly long chapter. But I hope that it's been helpful. I hope that it gets you guys pointed in the right direction. And at the very least, make sure you subscribe to the channel, so when I post more helpful videos like this, you'll be able to watch them as soon as they get posted. All right, so thank you guys for tuning in. Again, if you want to learn more, come over to warriortraining.com slash strategy. And we'd love to have you join the classes and become a student because one of the things that's really hard is trying to piece it all together just by watching miscellaneous videos. Trading is hard. It really is. Don't underestimate that. Thanks for tuning in. I'll see you guys for the next episode. And that right there was an entire video with no ads. I don't monetize my YouTube channel with video ads, which means you guys get to enjoy the content. But do me a favor. Please hit that subscribe button and give me a thumbs up and let YouTube know that this channel. It's the channel to watch if you want to learn about day trading.

stocks a million different ways. And I have found a way that for me works really well. And so what I'm going to do here is I'm just going to cut through all the kind of baloney.

You guys know who I am. I don't need to tell you about me. I don't need to tell you about why I'm credible.

If you want to see my broker statements, you can actually... actually see them on my website, warriortrading.com, I'm just going to tell you about this strategy, which is day trading gappers. So one of the challenges, of course, with learning how to trade is finding stocks to trade. One of the other challenges is finding credible information that's useful, helpful, and helps you grow as a trader.

So what I want to show you here is a perfect example of trading gappers. So this is the topic for today. It's an excerpt straight from the Warrior Pro... pro courses. Obviously, I teach classes over at Warrior Trading.

We'd love to have you guys join us. If you want to learn more, come over to warriortrading.com slash strategy. There's a special page there that's specifically for you guys checking out this episode here on Trading Gappers. So let's go ahead and jump in. But before I do, I'll remind you as always that trading is risky in case you didn't already know that and my results are not typical.

So you should not assume that you will achieve the same or similar results as me and you should not try to blindly follow me or anyone else. you've got to learn the strategy and ultimately that's the biggest challenge with getting started trading finding a strategy a system of where am i going to find stocks to trade and then once i find them where am i going to get in where am i going to get out etc and that's what i teach in the warrior pro class so um this right here is um chapter um chapter seven gap and go trading now gap and go trading is a fairly long chapter it has several parts let's see see, I can jump forward to it. Let's see what chapter is this. This is chapter eight.

By the way, this slide deck is over a thousand slides. So it's, it's pretty packed. But so here's chapter seven gap and go. So this is, we're going to be kind of getting into some of the basics here.

Now I'm going to talk about the process of reviewing the gap scanners, but before I get in that far, let's just step back for a second and let's look at this chart. Okay. So what are we looking at here?

Let's get oriented. What we're looking at is the gap scanners. So let's look at the gap looking at is a stock that right now at this very moment is up 225%.

I'm up $77,999.99 on it, which is a terrific green day. Okay. It's got 111 million shares of volume.

You can see that right there. So those are the number of shares that have traded hands and it's a NASDAQ stock. It's listed on NASDAQ.

It's not listed on the American exchange or NYSE or on the OTC exchange. Thank you. all right well is there any inclination that this stock was going to make this huge move from 12 all the way up to a high of 28.83 will mark out the high right there well you know why don't we clear all of our lines and kind of just get back to basics keep this really simple i'm not gonna in this video break down the nuances of drawing trend lines and things like that we cover all of that extensively in the classes i also have other videos on youtube here and there where i hint and sort of talk about the process of drawing these lines so i'm not going to go into that right now but what you can see is a fairly clean and fairly simple chart i have volume bars i have some moving averages i have the volume weight average price this morning indp was gapping up 67 what does it mean for a stock to gap up does anyone know it means that it's going to open today higher than it closed yesterday so yesterday the stock stock closed at about $7 and this morning it opened at $11.85 representing an impressive 67% gap on the daily chart.

So the word gap comes from the fact that this chart, which is a daily chart, has this big gap right here. All right. So that's the gap.

Maybe it's, oh, it's actually from about $7.05. In any case. So that's our gap on the daily chart. So this stock was gapping up. Yesterday it traded on approximately 170,000 shares of volume, and today is trading on 1,310 times relative volume, with total volume of now 112 million shares.

How does the stock go from 170,000 shares one day to 112 the next day? News. So this stock did have breaking news this morning, which...

Of course, is what typically creates a gap. So the stock had news. You can see it out at 7 a.m. right here. And I'm not a fundamental trader.

I'm not really dissecting the quality of the catalyst. There are times where we'll see a headline that sounds really great. You know, a stock has like FDA approval for, you know, a nasal spray for treating migraines. And then the stock drops 25%. And you're like, how is this possible?

This seems like great news. So I try not to over analyze the news and I just recognize that there is news and if the stock is moving up then clearly the market is responding positively to the news. So I guess the news is good. That means I'm a technical trader.

I focus on the technicals more than the fundamentals. So this is the chart right here. The stock started squeezing up at 7 a.m. as soon as the news came out and it actually squeezed from $7.50 up to $10 briefly.

It pulled back and then it rallied up to $10.50. it pulled back and then it rallied up to a high of $12.87. And there were certainly some traders who were trading it early in the morning, who maybe sat down on the early side and saw that this was an opportunity.

How would they have seen it? How would they have known the stock was moving? Right here. This right here is actually software that I developed for my students, and I use it myself.

We all use it. And this software scans the entire stock market for stocks that are gapping up. So right here we have it sorted by the leading gapper. So every student who's in our Warrior Pro classes in the part of the curriculum and part of the community, when you log in each morning you can log into the chat room, you can see me trading, and you can also see this gap scanner. So this is our small cap top gappers.

And you can see there were a number of gappers today. I look at something at minimum up five percent. If it's up at least five percent that's to me statistically significant.

But we also look for stocks down more than 5% because sometimes those present opportunities either to short it or for a gap down reversal. But I'm going to focus primarily here on the leading gapper. So each day when I sit down, I'm usually looking at the top five leading gappers. The leading gapper is the one that's up the most.

And sometimes it's a stock that's like, you know, 60, 70 cents. It's too cheap. I don't really want to trade it.

I don't really get into trading penny stocks. Sometimes it's a stock that's too expensive. It's $100 a share. Now that's not as common because for a $100 share stock to be gapping up 60, 70%, I mean, that's a huge gap at a high price.

For us, like a $2 stock opening at $4, that's already a 100% gap. So it happens a lot faster on lower price names. And so what I do... To begin with is I review the scan. So if we pull this back up here, the process of reviewing the gap scanner.

All right. So, and these are some examples. These are some case studies of gappers that I traded.

This was one, $40,000 on Pixie. So Pixie on this day was the leading gapper. It was gapping up 78%, had a 300,000 share float, which I'll explain in a second, 1.8 million shares of volume and a catalyst related to COVID.

So that was one of the ones I traded, $40,000 on Pixie. Another case study here, MDGS on the morning scans, leading gapper, took some trades on that, $7,000. A POP, second leading gapper.

So on this particular day, the leading gapper had a float of 1.1 billion shares, ACB. That's a very, very large float. So let's talk about that for a second.

The process of reviewing the gap scanner. Initially, I look at the percentage gap. If our biggest gap around the day is only like 5 or 8%, then we don't really have anything that's super big.

So that's kind of disappointing. Usually, I like to see something at least 20%, if not higher. Why, just as a quick tangent, it's significant for me to even be approaching trading in this fashion. I'm going to pull up some metrics here.

Again, this isn't a like brag or anything like that I'm simply doing this to show you why what I'm saying is credible so this is about nine point five million dollars in gross profit and we're gonna look at instrument down here and let's see so performance by instrument movement is the majority on stocks that are over 10% and performance by the instruments opening gap So of 9 million, 9.5, 8.8 million is on a stock gapping up over 2%. So I make the majority of my profits trading stocks that are gapping up. That's why it's important if you're thinking about learning how to trade momentum. that you understand how to use a gap scanner and how to trade gappers.

So the process of reviewing the scan begins initially just with looking at how big the gaps are. And in this case, we've got a couple of big gaps. INDP was the leader. Now, I might already be familiar with that stock.

I can click on it and bring up some more detailed info on it over at warriortrading.com. You could also search right here. and bring up info on it if you wanted to. So we know we have news this morning 7 a.m.

and that's I suppose you could see the news. If we go back over here the float is 1.6 million shares. Now this is important. So if you haven't already watched any of my videos on float I have videos where I do a full definition of float and all the ways that float can change and everything else.

But just in very brief summary here, just to save you the time, float refers to the number of shares available to trade. So when a company does an initial public offering, they sell shares onto the open market. And then from that point forward, that becomes the float.

So if a company sells 2 million shares at $5 a share, they'll raise $10 million in their IPO. Right? And from that point forward, there's 2 million shares available to trade.

So if you wanted to buy, I guess the whole company, you would buy 2 million shares. Now, that's not always exactly true because sometimes companies will have larger blocks of shares that are a different class. So you wouldn't necessarily be able to buy the whole company by buying those 2 million, but that's getting more detailed that is important.

What's important for right now is understanding that the float represents the level of supply. So this is coming into a very simple supply-demand equation. If you have a stock that is in very hot demand, as IDNP, INDP was today, then the low supply creates an imbalance, and that's when you get a really big move in stock price.

Obviously, on GameStop, there was a huge imbalance between supply and demand. The float on GameStop is a bit higher. Hey, girl! Pull it together, girl! Showing right now at 46. million shares, but still relatively low compared to a company perhaps like Bank of America, which has 7.5 billion shares.

7.5 billion shares. Remember, 1 billion is 1,000 millions. So a company like INDP is 1 7,000th as big in terms of its float as Bank of America.

It's a tiny, itty-bitty company. And this itty bitty company, how is it possible that it could go up so much? I mean, you wouldn't think that maybe it could because it's such a small company. And it again comes back to supply and demand.

The shares of the stock are trading higher today on news. There are not a whole lot of sellers on this stock. And there are buyers and people are buying it and they're excited about it.

And this is the definition of momentum trading. So the trading gappers, I call it the gap and go strategy. Gap up, go up. Now these stocks can be volatile in both directions.

A gap up is not a guarantee that they'll go higher. MOSY is an example of one today that did gap up and then sold off at the open. So what's different about these two?

MOSY was the fourth leading gapper. Well both were worth keeping on watch and MOSY was worth in fact even trading right through this area here as it was breaking new. highs as it made new highs. At the open, it wasn't worth trading here until it broke over 680. So one of the setups that I like to trade is the break of the pre-market high. So through the gap and go, the full chapter in our classes, I talk about taking the first and second pullback.

And we have a bunch of examples of that. We also have live trading archives. Then I've got taking the break of the pre-market highs.

So this is the one that I'm looking at right now, break of the pre-market high. So in this case, we didn't get a break of the pre-market high on MOSY. Over on INDP, we did get a break of the pre-market high.

We got a pretty phenomenal break of the pre-market high. It was really spectacular right here. Okay, so that was the critical level that needed to break on MOSY that didn't. And I think the fact that we had something else that was so strong, This became the one that was really in focus and you know there's only so many traders out there and they can only focus on so many stocks at the same time.

So ultimately whichever one is the best one becomes the one that people focus on and people are trading. And so today that was IN. Alright, so we start by looking at the gap scan.

We then check the stock to see that there is news. Sometimes we'll have a stock on the gap scan and there's no news. And that's a little confusing because we don't fully understand why it's gapping up so much. However, simply the fact that it's up becomes a bit of its own catalyst, especially if it is one of the top five or ten leading gappers in the entire market.

So no news isn't necessarily a deal breaker. I checked the volume today, but not with a lot of focus on that. More than anything, I look at the chart and I look at the float.

If I see the float is 125 million shares or 89 million or 100, these are in white, which is a way of me kind of disregarding them. Not really usually going to be very interested in those stocks. Under 50 million is better.

Under 25 is better. Under 10 is better. Under 5 is better.

The lower the float, the more parabolic we see. Now it's not always true because GameStop was probably one of the most parabolic over a multi-day period, but what's more common is that lower float stocks, when they have a good catalyst, have a sharp imbalance in supply and demand that results in a really big move. So focusing on leading gapper and today this one had a 1.61 million share flow, very low flow. There are some more metrics here that we can look at, but we're going to focus primarily on the percentage gap the price of the stock and the float i do typically trade lower price stocks a little bit better than higher price stocks when we start to get into the price range of gosh like over 50 that's when things can start to get a little sloppy for me i probably have some metrics here yeah so here we have some metrics of profitability based on price So, you know, we start to get a little higher price and, well, GameStop kind of changed the metrics on that for me because I did really well on it. But in any case, I do better between 5 and, well, I guess you'd say between 2 and 20 would kind of be my sweet spot.

So generally, anytime a stock is on the gap scanner and it's between 2 and 20, I'm going to be pretty interested in it. And so in the case of INDP, on the gap scanner, moving up, the chart looks good. which means it's above the volume weight average price it's generally consolidating sideways and the logical breakout spot here based on setup number two break of the pre-market highs again i have a number of different setups that i trade this one also actually gave us a red to green move right here it dipped down and then broke out and we could also even call it an opening range breakout it was over 1250 and it ripped up to 1348 and got halted on a circuit breaker If you don't know what that is, again, that's something we talk about extensively in the classes. You can check out some of my other videos on YouTube if you want to look for it there.

Anyways, it gaps, squeezes up, halts, opens higher, dips down, rips up to 15. And so we have a couple of nice trades here. One is right here for the break at 12.50, which was to anticipate the break through the pre-market high of 12.86. Alternatively, an entry at 12.86 would have been fine, but a little extended on the one-minute chart.

It goes up to $13.48, which is an opportunity either to take profit or to hold for a bigger move. It goes up then to $14.18, dips down, first one-minute candle to make a new high right here, the first pullback, breakout, up to $15. And that's back to setup number one. Even if you just took those two trades, you do not want to overstay your welcome. Being a trader is not about taking 100 trades a day.

It's about managing your risk. And if you can take a couple of trades, one or two really good trades each day, by focusing on high quality, you're going to have a higher percentage of success. If you focus on just, you know, kind of hitting, trying to trade everything that's moving, your accuracy is going to drop.

And it's really not a good way to approach trading because every trade you take carries risk. So the biggest way that I mitigate risk is by finding a strong stock to trade, and it starts right here with Gap Scanner. Then I try to find the best entries. And then I try to remind myself not to overstay my welcome.

To trade it as aggressively as I can, but to know when to walk away. Today I was up $103,000 and I gave back about $15,000 off the top and that was my cue to walk away. I gave back profit off the top. I gave back $10,000 on this red candle right here.

Right there. And then I actually added back right here. I made back the $10,000 I lost.

And then I lost $10,000 again right here. And at that point I said, you know what? I haven't made any money since right here. Maybe it's time to just throw in the towel and stop trading. Now we did end up having more opportunities later in the day on this later in the morning, but not without some false breakouts and some choppiness.

So, you know, I'm sure there's people that traded all day long that made more than me. I'm sure there's people who traded all day long that made less than me. It's not a competition to see how much you can make or how much you could lose. If you can get green and you can shut it down, you're actually going to be doing something that the majority of traders haven't figured out how to do consistently.

And it starts by knowing how to find strong stocks to trade. And for me, the gap scanner is the go-to place. Again, just to emphasize, I know you guys have, you know, there's a million people out there talking about trading and trying to teach you things about trading. One of the biggest challenges that I found when I was getting started is how to find credible information. I want to learn.

Just cut through all the nonsense, all the baloney. Just get straight to credible, valuable information that's got some. You know, proof that it actually works.

Because a lot of people, they talk a big game, but then there's no proof. You guys can see the broker statements on my website. You can see that my profits are real. And those are based on trading, gapping stocks, just like this, the majority of the time. And if you want to keep learning, if you want to learn my whole strategy, I am happy to teach it to you.

That's what I do over at Warrior Trading. And you can check it out. Come over to warriortrading.com slash strategy. Again, this is just an excerpt from...

chapter 7 of the Warrior Pro classes. It's a short one, a short excerpt, because this is just by itself a fairly long chapter. But I hope that it's been helpful. I hope that it gets you guys pointed in the right direction.

And at the very least, make sure you subscribe to the channel, so when I post more helpful videos like this, you'll be able to watch them as soon as they get posted. All right, so thank you guys for tuning in. Again, if you want to learn more, come over to warriortraining.com slash strategy.

And we'd love to have you join the classes and become a student because one of the things that's really hard is trying to piece it all together just by watching miscellaneous videos. Trading is hard. It really is.

Don't underestimate that. Thanks for tuning in. I'll see you guys for the next episode. And that right there was an entire video with no ads. I don't monetize my YouTube channel with video ads, which means you guys get to enjoy the content.

But do me a favor. Please hit that subscribe button and give me a thumbs up and let YouTube know that this channel. It's the channel to watch if you want to learn about day trading.

Transcript for:Day Trading Gappers Strategy Overview

Transcript for:
Day Trading Gappers Strategy Overview