Why stocks will have gap up/down opening?

[sudoku1]

[*]Opening price is controlled by amateur or novice traders
[*]High price is controlled by bulls
[*]Low price is controlled by bears
[*]Close price is controlled by professionals like institutions
.

& they together control the market

 

[Placebo]

The opening and closing of any financial asset is controlled by the Professional Money and not individual investors. 75 % of the turnover in highly volatile assets can directly be attributed to the activity of the Smart Money. At the end of each closing session the price will tend to show either some element of strength or weakness.

Gap Up usually occurs when the price is facing huge amount of supply and the resistance has tried to be penetrated on several occasions but without any result. The increase in volumes near Resistance Areas shows "Professional Effort" in moving the prices up and the fact that price did not move up shows a failed result. But the money has already been invested by them. So the prices are Gapped Up to penetrate this area.If the Gap Up is genuine then this can be a very good entry point for going long as now our previous resistance area is acting as support now which will need extra effort in order to drag the prices down.

Now Gap Ups can be of two types.

A. Genuine Gap Up : The best example of this is when price moves up and penetrated an Area Of High Resistance and then price falls down a bit on Low Volumes. Most people get confused with this and place a Short here. The professional money is once again successful in trapping the individuals as Christmas has come early for these Professional Bulls. Under these conditions price will surge suddenly and the shorts will cover their position and contribute to the movement of prices on the upper side

B. False Gap Up : Although the price has been gapped up , it does not necessarily mean that there will be a rally. If you look closely the support level is not holding good and the price is going down on High Volumes followed by low volumes narrow spread upbars. (Best Entry Point to Short). This happens when the cumulative trading syndicate realizes that the majority of individual investors are Bullish Now. Basically Demand will dry up here as only 25 % of the traders are Long and the professionals will once again say "Thank You Very Much" and drop the prices drastically.The so called Bulls will find out in a bitter way that price rise is highly unlikely from here and would exit their position after averaging at a considerable loss. This would act as addition of momentum to the downside.

Price Movements are not random by nature. Demand & Supply are the driving force which determine the price for everything. If demand dries up price will fall and vice-versa

I am working on how Gap Downs work and the effect they have on price movements based on critical trigger points. Once that's done i shall post here.

Cheers

 

[Satyen]

The opening and closing of any financial asset is controlled by the Professional Money and not individual investors. 75 % of the turnover in highly volatile assets can directly be attributed to the activity of the Smart Money. At the end of each closing session the price will tend to show either some element of strength or weakness.

Gap Up usually occurs when the price is facing huge amount of supply and the resistance has tried to be penetrated on several occasions but without any result. The increase in volumes near Resistance Areas shows "Professional Effort" in moving the prices up and the fact that price did not move up shows a failed result. But the money has already been invested by them. So the prices are Gapped Up to penetrate this area.If the Gap Up is genuine then this can be a very good entry point for going long as now our previous resistance area is acting as support now which will need extra effort in order to drag the prices down.

Now Gap Ups can be of two types.

A. Genuine Gap Up : The best example of this is when price moves up and penetrated an Area Of High Resistance and then price falls down a bit on Low Volumes. Most people get confused with this and place a Short here. The professional money is once again successful in trapping the individuals as Christmas has come early for these Professional Bulls. Under these conditions price will surge suddenly and the shorts will cover their position and contribute to the movement of prices on the upper side

B. False Gap Up : Although the price has been gapped up , it does not necessarily mean that there will be a rally. If you look closely the support level is not holding good and the price is going down on High Volumes followed by low volumes narrow spread upbars. (Best Entry Point to Short). This happens when the cumulative trading syndicate realizes that the majority of individual investors are Bullish Now. Basically Demand will dry up here as only 25 % of the traders are Long and the professionals will once again say "Thank You Very Much" and drop the prices drastically.The so called Bulls will find out in a bitter way that price rise is highly unlikely from here and would exit their position after averaging at a considerable loss. This would act as addition of momentum to the downside.

Price Movements are not random by nature. Demand & Supply are the driving force which determine the price for everything. If demand dries up price will fall and vice-versa

I am working on how Gap Downs work and the effect they have on price movements based on critical trigger points. Once that's done i shall post here.

Cheers

Nice Just came across this thread today ..... waiting your study ...

 

[Satyen]

Thank you for giving me the reply.Kindly let me know the following also
1)I'm a position trader.I'Ve on line demat account of icici direct.Can i place delivery buy/sell order beyond working hours of market?If so how?

Hi instead of Anticipating a Gap why not we search for oppertunities after a gap formed .........