What is a “Gap-and-Trap”? (Trading 101)

As a beginner, ever seen another trader refer to a trading situation as a “gap-and-trap” but have no idea what they’re talking about? You’re not alone! I remember when I was just getting started as a day trader in the stock market not having any understanding of what was being referred to! The good news is, the concept of a “gap-and-trap” is very straightforward. I will show you what a gap is using a few real life examples and then do a bit of clarifying in regards to what is meant by “trap”. If you want to survive as a day trader (or swing trader) then you need to be aware of this potential situation you could put yourself in. If everyone is being honest, I think the vast majority of traders can relate to being part of a gap-and-trap at least once in their trading journey. This is a very basic Trading 101 concept, but once understood, it can be a great motivator for discipline and continuing to develop systems that allow you to follow rules and protect your trading capital. Let me show you what I mean!