Different people approach different intraday strategies to get success. But there are many analysts, who think that breakout strategy and gap strategies are same. In this post you will get to know the difference between the two intraday strategies:
In the breakout strategy the market is first watched in the initial hours. After watching the market in the first hour one can mark the high and low in this first hour. Then the breakout from this range of high and low is watched. If the breakout is obtained from the high an uptrend is anticipated and if the breakout occurs from the low a down trend is supposed to continue. Thus appropriate buy and sell positions can be taken on the breakouts. This strategy is based on the fact that during the initial hours of trading there are market fluctuations. As the time passes the trend begin to form. Thus appropriate buy and sell positions can be taken after the trend has been formed.
In the gap strategy firstly a gap is identified. The gap is the difference between the last day’s close and today’s open. The gap can be positive, Negative, with high magnitude and with low magnitude. Thus based on the gap and its magnitude an appropriate position is taken in the market. The gap strategy is favorite of many traders. The gap strategy has appeared to be useful in the past.