In the short video below I show you how I successful day traded CarMax Inc. (KMX) short on a bearish gap down from December, 20, 2013.
Why trade KMX gap down?
1) Expanded volume provided liquidity for easy fills in and outs.
2) News event driving the gap down gives emotion and momentum.
3) The gap down is not too extended meaning it has more room to fall.
4) The gap goes against a bullish move off the daily chart (trapping investors).
How you find good gaps in the premarket?
1) Earnings provide ample gaps in the market use the daily earnings list.
2) Look for gaps in the premarket that are trading with volume over 100,000.
3) Look for gaps that have not gapped to extended for continuation moves in support or resistance.
Learn some key notes about looking for events, volume and expanded trading ranges in the video below.
WATCH THE VIDEO
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