Knowledge desk
Review a concept. Apply it in a tool.Professional vs novice gaps
Read the recent price action, relevant resistance and opening response before looking for an entry.
- Professional gap
- A gap reclaims nearby resistance with sellers caught behind the move. Prioritize this context.
- Novice gap
- An extended move opens into resistance. A higher open can still be a warning.
Questions to ask
01What happened before the gap?+
Look at the recent daily bars. Fresh selling and an already extended rally create different opening contexts.
02Which level does the open clear or meet?+
Mark the nearby relevant level. An old distant high is not always the level that matters.
03Does the new opening range hold?+
Watch the response after the open. Gap size alone does not establish a tradeable setup.
Source material
Trading with the market
Read the broader market, prepare both directions and judge the stock’s setup in that context.
- Market bias
- Describe the broader direction as bullish, bearish or unclear. Identify the level that would change that read.
- Stock context
- Compare the individual idea with the market. If it diverges, identify the evidence for relative strength or weakness.
- 01Read the market
- 02Inspect the setup
- 03Define the risk
Questions to ask
01What is the market doing?+
Establish the broader direction before narrowing the search to an individual stock.
02What would change the plan?+
Define a confirming level and an invalidating level. Prepare an if then response for either direction.
03Does the stock’s setup agree?+
Check the stock’s direction and the pattern. Timeframe alignment is a separate check within the stock, not a substitute for the market read.
Source material
Multiple timeframe alignment
Check whether the other charts support the direction of a setup. A lower timeframe can be in conflict even when the setup looks attractive.
- Trend read
- James uses price above a rising 20MA for an uptrend, and price below a declining 20MA for a downtrend.
- Directional agreement
- For a long, look for the relevant charts to point higher. For a short, look for them to point lower. Alignment is confirmation, not a guarantee.
- 01Read the setup chart
- 02Check the chart underneath
- 03Keep checking after entry
Questions to ask
01Which timeframe group matters?+
James looks for 1m, 2m, 5m and 15m alignment for day trades. For swing trades, he checks hourly, daily, weekly and monthly. He does not require all eight to agree for every trade.
02What is the chart underneath doing?+
A 15-minute buy setup can face a 5-minute downtrend. James usually starts with the timeframe immediately below the setup chart, instead of assuming the lower charts agree.
03Has the lower conflict resolved?+
In his examples, James lets the initial entry go and watches for the lower downtrend to fail. A curling 20MA and candles holding above it can reveal a turn. Sometimes no later entry appears, and he is willing to miss that move.
04Is alignment holding after entry?+
Alignment can appear and then deteriorate. Around 6:40, James explains how a weakening 5m chart can provide an early warning and prompt a risk review before the larger view looks broken. It does not predict failure or prescribe a stop change.
Source material
Basics first. Then read the chart.
Gap definitions, chart context and the difference between Pro and novice gaps.
Read an opening chart, identify the relevant level and choose the better interpretation.
Sami’s bullies, buries, island reversals and quasi context. Additional material, not taught by James Rich Young.
T3 Live / Pristine’s fills, direction, news, size and imbalance. Additional material, not taught by James Rich Young.
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