{"id":2004,"date":"2019-03-11T06:00:08","date_gmt":"2019-03-11T13:00:08","guid":{"rendered":"https:\/\/www.steadytrade.com\/?p=2004"},"modified":"2019-04-05T11:55:09","modified_gmt":"2019-04-05T18:55:09","slug":"ep-88-chart-patterns-the-gap-and-crap","status":"publish","type":"post","link":"https:\/\/www.steadytrade.com\/ep-88-chart-patterns-the-gap-and-crap\/","title":{"rendered":"Chart Patterns: The Gap and Crap"},"content":{"rendered":"<div id=\"backtracks-player\" data-bt-embed=\"https:\/\/player.backtracks.fm\/st\/steadytrade-com\/m\/ep-88-chart-patterns-the-gap-and-crap\" data-bt-theme=\"dark\" data-bt-show-description=\"false\" data-bt-show-comments=\"false\" data-bt-show-art-cover=\"true\"><\/div>\n<p><script>(function(p,l,a,y,e,r,s){if(p[y]) return;if(p[e]) return p[e]();s=l.createElement(a);l.head.appendChild((s.async=p[y]=true,s.src=r,s))}(window,document,\"script\",\"__btL\",\"__btR\",\"https:\/\/player.backtracks.fm\/embedder.js\"))<\/script><\/p>\n<p><span style=\"font-weight: 400;\">What a long, strange trip it\u2019s been! The SteadyTrade Paper Trading Challenge is in the home stretch, and today, host Stephen Johnson is trying to guide his remaining student Liz to victory! <\/span><\/p>\n<p><span style=\"font-weight: 400;\">In the episode, Stephen guides Liz through some great new strategies to add to her repertoire. Traders will want to listen up as he explains two of his favorite patterns: the beloved gap and crap pattern and its companion, the gap and go pattern. Will these patterns help take Liz all the way to the winner\u2019s circle?<\/span><\/p>\n<p><i><span style=\"font-weight: 400;\">Note: <\/span><\/i><span style=\"font-weight: 400;\">Don\u2019t miss this episode on YouTube, because Stephen pulls up several charts to give an intensive overview of these valuable trading patterns! <\/span><\/p>\n<p><b>New Month, New Rules<\/b><\/p>\n<p><span style=\"font-weight: 400;\">With a new month, there are new rules for the Challenge, and only 25 trades are permitted in March. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Unfortunately, this means trouble for Liz, who has come to rely mostly on scalping techniques to grow her paper trading account. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">The key to her success has been making lots of trades with tiny profits that have accumulated to an impressive account size. But to get ahead with the new rules, she\u2019ll have to change her strategy, because her trades are limited.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Luckily, Stephen\u2019s got her back with some of his tried and true patterns. <\/span><\/p>\n<p><b>Mind the Gap <\/b><\/p>\n<p><span style=\"font-weight: 400;\">Before you can understand either of the patterns introduced in the episode, you must know the meaning of the gap. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Nope: We\u2019re not talking about a chain store selling khakis. In trading, an overnight gap measures the difference between yesterday\u2019s market closing price and today\u2019s opening price.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A stock is considered a \u201cgapper\u201d when it gaps up from the previous day\u2019s closing price. Often, this happens in the pre-market hours. When a stock gaps like this, it can create opportunities for traders. <\/span><\/p>\n<p><b>Gapping Patterns for Traders <\/b><\/p>\n<p><span style=\"font-weight: 400;\">Follow along as Stephen introduces Liz to two patterns that she (and you!) can take advantage of: the gap and crap pattern and the gap and go pattern. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">In either case, the stock has gapped up from the previous day\u2019s close. However, it could go in one of two directions.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">With the gap and crap pattern, the idea is that the stock won\u2019t hold its spike and will go down rapidly when the market opens. While the spike may entice many traders to buy in, the ascent is unsustainable and the stock\u2019s price will likely crash and burn. As Liz puts it, this type of stock \u201cneeds a diaper\u201d! <\/span><\/p>\n<p><span style=\"font-weight: 400;\">With the gap and go pattern, the idea is that the stock will continue its ascent and the price will continue to go up once the market bell rings. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Stephen offers up several chart examples of each pattern to help both Liz and listeners understand how to identify them.<\/span><\/p>\n<p><b>Making the Most of These Patterns<\/b><\/p>\n<p><span style=\"font-weight: 400;\">In the episode, Stephen and Liz how to make the most of these patterns, including tips such as:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><b>Don\u2019t get short premarket. <\/b><span style=\"font-weight: 400;\">Or if you must, go small. Stephen can say this from experience: he\u2019s literally lost thousands by going too big! <\/span><\/li>\n<li style=\"font-weight: 400;\"><b>Build a strong case. <\/b><span style=\"font-weight: 400;\">If you want to trade these patterns, you still have to make a strong case for the trade. Learn about what to look for in daily and intraday charts, and how to read into a double top to make a case for your trade. <\/span><\/li>\n<li style=\"font-weight: 400;\"><b>Entry and exit points. <\/b><span style=\"font-weight: 400;\">Timing is everything when it comes to these patterns. In the episode, Stephen offers great tips for how to determine the most intelligent entry and exit points.<\/span><\/li>\n<li style=\"font-weight: 400;\"><b>When to go short versus long. <\/b><span style=\"font-weight: 400;\">Stephen and Liz also talk about how to discern opportunities that are better to go long, and those that are better to go short, including what indicators to look at, and what sort of information you should look for in the news and in SEC filings. <\/span><\/li>\n<\/ul>\n<p><b>Curious about something? <\/b><\/p>\n<p><span style=\"font-weight: 400;\">Do you have a question or comment about something from the episode or trading at large? Leave a comment below, or on YouTube!<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Thanks for tuning in to the SteadyTrade Podcast. Stay tuned for weekly episodes featuring the hottest topics for aspiring traders!<\/span><\/p>\n<p><b>Did you love this episode? Be sure to leave an <\/b><a href=\"https:\/\/itunes.apple.com\/us\/podcast\/steady-trade-the-profitable-side-of-trading\/id1275946076?mt=2\"><b>iTunes review<\/b><\/a><b>!<\/b><\/p>\n<p>Be sure to bookmark the nasdaq trade halt codes Tim Bohen mentioned at the beginning of the video!\u00a0<a href=\"https:\/\/www.nasdaqtrader.com\/Trader.aspx?id=tradehaltcodes\" target=\"_blank\" rel=\"noopener\">https:\/\/www.nasdaqtrader.com\/Trader.aspx?id=tradehaltcodes<\/a><\/p>\n<p><iframe loading=\"lazy\" width=\"1080\" height=\"608\" src=\"https:\/\/www.youtube.com\/embed\/zvs_8zF-i1E?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; encrypted-media; gyroscope; picture-in-picture\" allowfullscreen><\/iframe><\/p>\n","protected":false},"excerpt":{"rendered":"<p>What a long, strange trip it\u2019s been! The SteadyTrade Paper Trading Challenge is in the home stretch, and today, host Stephen Johnson is trying to guide his remaining student Liz to victory! In the episode, Stephen guides Liz through some great new strategies to add to her repertoire. Traders will want to listen up as [&hellip;]<\/p>\n","protected":false},"author":2283,"featured_media":2008,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":""},"categories":[3],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.8 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Chart Patterns: The Gap and Crap - SteadyTrade.com<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.steadytrade.com\/ep-88-chart-patterns-the-gap-and-crap\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Chart Patterns: The Gap and Crap - SteadyTrade.com\" \/>\n<meta property=\"og:description\" content=\"What a long, strange trip it\u2019s been! 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