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Amateur vs. Professional Gaps

When analyzing gaps on a chart, the key question to ask yourself is this:

Did this gap result from amateur traders reacting emotionally, either buying or selling?

Or was it the professional traders, who base their decisions on logic rather than emotion?

To determine this, there's a crucial concept you need to grasp first...

Professional traders buy after a wave of selling and sell after a wave of buying.

Amateur traders, on the other hand, do the opposite! They see a stock rising and, driven by fear of missing out, rush to buy – right when the pros are preparing to sell.