RE: GAP....12 Jun 2020 19:55
You still don`t get it Cocoa, and probably never will.
I`ll give you an example, Investor A wants to buy some NCYT shares, he`s done the research and decides he wants in, so he waits for the market to open and just buys...at whatever price... because he`s sure that the sp will hit previous highs, lets say 325p, which it was at on 1st June.
Technical Investor B also wants in, but wants to wait for a confirmation buy signal, and in this case he would be looking for price to break above, hold, and close above the recent falling trend line. Price does go up on 2nd June but falls back and closes below the trend line so he stays in cash.
Since then there has been pretty decent falls, so the RSI and daily stochastics head negative and the technical trader stays in cash as he watches the price fall through 300p...then 250p and so on.
So he`s looking to time the reversal, and sees the gap at c218p, so he thinks..`well I`m not going to buy until that gap is filled, and if there`s any news in the meantime I`ll just buy if its good`!
But the news doesn`t come, so he waits, and today he decides to buy at 220p because the gap got filled.
So Investor A paid 325p, and savvy technical investor B paid 220p!!
So which one`s working on Neanderthal principles and which one is the modern day investor?
I know which one I prefer to be.