NDOG - New Day Opening Gap - Part 1

NDOG - New Day Opening Gap - Part 1

Introduction to New Day Opening Gap

In this module, the speaker discusses the concept of New Day Opening Gap and how it is not a random event. The opening price is offered to the market and whichever trade gets filled there starts the beginning of the new day opening gap.

Definition of New Day Opening Gap

  • New day opening gaps are not a random event.
  • The opening price is offered to the market and whichever trade gets filled there starts the beginning of the new day opening gap.
  • Closing prices are not a random price event either so new date opening Gap uses closing prices from previous sessions.

Formation of New Day Opening Gap

  • A new day opening gap forms every day Monday through Friday.
  • If there is little separation between where we close at 5 pm and where we resume trading at 6 pm, then this pattern may not be an everyday event.
  • A meaningful separation between two price points is preferred for a new day opening gap.

Utilization of New Day Opening Gap

  • The new day opening gap should only be utilized for the week when it ends and we start a new week.
  • Once that week closes, I'm not interested in that new day opening gap anymore.
  • The very first new day opening gap will be utilized throughout the entirety of that week if it's meaningful enough.

Example

  • An example was shown on Wednesday's 6 p.m. local time in New York.
  • Price action respecting that new day opening up here as support was demonstrated.

Understanding Fair Value Gap and New Day Opening Gap

In this section, the speaker explains the concept of repricing to specific PD arrays when it touches them. They discuss how a fair value gap and new day opening gap can act as support or resistance levels for price movements.

Repricing to Specific PD Arrays

  • When price touches a specific PD array, it may reprice to that level.
  • This does not necessarily mean that it will act as support and go higher. It could also go down and find confluence with other levels.
  • The speaker gives an example of an old new day opening gap low acting as a confluence level.

Fair Value Gap

  • A fair value gap is a buy-side imbalanced outside inefficiency.
  • Optimal trade entry occurs when price drops from the fair value gap to touch the new day opening gap below.
  • The speaker emphasizes that this is not a blind strategy but rather one that should be used in conjunction with other analysis concepts.

New Day Opening Gap

  • The new day opening gap can act as both support and resistance levels for price movements.
  • The speaker recommends looking for opportunities to scalp by trading up into and repricing the high of the new day opening gap during Asian sessions.

Bullish Breaker Trades

In this section, the speaker discusses bullish breaker trades and how they relate to previous support levels.

Bullish Breaker Trades

  • Price rallies after hitting a bullish breaker trade.
  • The bodies of candles tell the story while wicks do damage.
  • Candles did not close below previous swing lows, indicating strong support at those levels.

Utilizing New Day Opening Gaps in Trading

In this section, the speaker talks about how to utilize new day opening gaps in trading.

Utilizing New Day Opening Gaps

  • The speaker recommends using new day opening gaps as a supporting factor or resistance level for other analysis concepts.
  • They suggest looking for opportunities to scalp by trading up into and repricing the high of the new day opening gap during Asian sessions.
Video description

CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN Trading performance displayed herein is hypothetical. Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance trading results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results. U.S. Government Required Disclaimer – Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with money you can’t afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results. Trade at your own risk. The information provided here is of the nature of a general comment only and neither purports nor intends to be, specific trading advice. It has been prepared without regard to any particular person’s investment objectives, financial situation and particular needs. Information should not be considered as an offer or enticement to buy, sell or trade. You should seek appropriate advice from your broker, or licensed investment advisor, before taking any action. Past performance does not guarantee future results. Simulated performance results contain inherent limitations. Unlike actual performance records the results may under or over compensate for such factors such as lack of liquidity. No representation is being made that any account will or is likely to achieve profits or losses to those shown. The risk of loss in trading can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. If you purchase or sell Equities, Futures, Currencies or Options you may sustain a total loss of the initial margin funds and any additional funds that you deposit with your broker to establish or maintain your position. If the market moves against your position, you may be called upon by your broker to deposit a substantial amount of additional margin funds, on short notice in order to maintain your position. If you do not provide the required funds within the prescribed time, your position may be liquidated at a loss, and you may be liable for any resulting deficit in your account. Under certain market conditions, you may find it difficult or impossible to liquidate a position. This can occur, for example, when the market makes a “limit move.” The placement of contingent orders by you, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders.