How to Manage Gap Risk in Swing Trading? Price Gaps Through Your Stop!? πŸ€”

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What to do if price gaps through your stop? Market gaps and slippage. Do stops protect you against gaps? How do I tackle the gap problem during market opening? Why you should mind the gap when using stops? How to manage gap risk in swing trading?

Imagine we are long and we are sitting on a stock that is rising nicely and all of a sudden we wake up the next day to see that the price has gapped through our stop. Assume we had a mental stop, what are you going to be? This depends on your risk tolerance, how you want to approach the markets, what you are planning to achieve, the setup..etc You need to plan for this because your emotions after the event will be high and it is easy to panic. This allows you to execute the plan if you encounter this emergency. You want to mitigate the damage as best you can.

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Comments

UKspreadbetting says:

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Nobel Eagle says:

Great explanation on some of the options to take, when getting stuck in this pickle. Very well articulated and laid out for the student to understand and remember.

Personally, I buy up shares on sale, and wait for a reversal.

That’s why I plan for this gap down, or just a general move down, with back up money. And when I start going in, I don’t go all in.

Ashley Lemmer says:

Excellent one Mark.

Shakeel Arshad says:

Last week i lost 1000 dollar account bcz of elections

lombardo141 says:

Or buy puts option to protect the position.

Troy's romantic abnormality says:

I use to wait one sinus and if I see a weakness and lower high I sell as a hedge. Sooner is better. The hedge can be managed as a new trade with a tight SL. However there's that thing called SWAP – when I'm long on gold and the price is lower for weeks I pay a lot but being short when price is up pays me a some little swap money so it's less of a problem.

john butler says:

Don't trade with leverage. Or it won't be long before you are not trading.

BrotherTree1 says:

Moral of the story; it's already awful. Don't make it more awful. Do something to make it less awful than it can be.

Gerald Koh says:

Love ur videos

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