What do we do after gap down?

This is the excerpts from my morning market view that is posted early in the morning in my blog. This is not a prediction or trading tip. This is an analysis of premarket macro narrative.

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  • European and US futures in Asia session are rebounding from yesterday’s panic sell-off

  • Asian Market fall this morning is not as sharp as it was in EU/ US markets


  • Major sell off in global markets

  • Both FII & DII sold in cash yesterday

Global Markets: Sell off

Both US and European markets saw a sharp selloff. What started off as profit booking after Federal Reserve policy decision has snowballed in to panic selling that sent markets sharply lower.

Panic spread to most of the other asset classes as well such as emerging market ETFs traded in US, High yield bonds etc. One exception was emerging market currency index, the fall was not as sharp as it was in other asset classes. Safe haven assets Japanese Yen was sharply up while gold and dollar index reacted less. The US volatility index was up sharply also.

ASIAN Markets this morning: - Negative

Asian markets are trading in negative territory. However, they are down about 1-2% which is much lessor than what developed markets witnessed yesterday. SGX Nifty is trading about 250 points below yesterday’s Nifty close. SGX Nifty is actually recovering from yesterday night lows.

Calendar events

India’s Trade balance, current account situation and forex reserve position will be released today after market closes.

India : What about Nifty?

The Indian markets have been at the mercy of global mood for while. The panic sell-off will definitely have an impact and markets are likely to open sharply down. It’s easier to know the how markets will open today but what happens after sharp gap down and how to trade in these markets requires skill.

What may happen today after gap down? Lets find out here

Disclaimer: Author is not responsible or liable, directly or indirectly, for any form of damages whatsoever resulting from the use (or misuse) of information contained in or implied by this posting. This should not be relied on as a source of financial, investment or trading advice. What works for one individual may not work for anyone else. Always consult and check with your financial advisor. I am an active trader therefore I have conflict of interest with whatever I have mentioned here.


Hello @TraderVenk
Your articles are pretty simple and easily understandable, thanks for those.
How much time you are taking everyday to do that analysis?
(As you are covering most of the points)

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7.30 -7.45 study the inter markets/ global markets
7.45-8.15 write down the blog

I try to keep the language jargon-free but sometime they still creep-in. :grinning:

Thanks man these are really nice

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Neat, precise and informative.

Thank you!

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that is what attracting!:heart_eyes::heart_eyes:

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What’s going on ?
Market is still like water.

It feels as if everyone is waiting for the supreme court’s judgment.

What are your views ?

I expect this sell off to be developed markets focused… I m hoping that today’s low will hold for some time…

Just my views…

Can you throw light on USD-INR

Let’s see


  • RBI wants to raise its war chest by about $50 billion as BofA. This means it will continue to buy incoming dollars

  • FIIs encouraged by low interest rates in DM are chasing yield in EM bonds/ equities

  • Should be range bound 74-76

My tweet about RBI buying up dollars


FII and DIIs have gone into sell off by profit booking all over the world, and the market has gapped down. The positive trend still being strong based on various parameters you have chosen makes sense.

Challenge is, from market open the equities that gapped down all are raising. It is strange to see the market fall down and get going as if nothing happened. I am sure you and other experienced traders must have seen this happen countless time.

I suppose the increase is coming from retail investors expecting the up trend to continue, and to profit at a later date. If DIIs have really decided not to sell off as per your speculation(read the disclaimer :slight_smile:) then it is true till now.

It is uncomfortable to watch all the prices increasing in front of my eyes and keep away from the market. Yet, the strange feeling that the herd is moving towards eventual demise, and not be a part of the herd, is the only thing holding me back till now.

Market has cooled off eventually as of now, verdict is pending and EOD will decide.

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Agree with ur analysis

What a day so far… :yum:

EOD update: :+1::relaxed:

Price action was crazier than thought

Snap from premarket blog:

Nice write up @TraderVenk you say you are active trader. Could you also explain on the trades you did today or is something confidential :smile:

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Thanks harshendra… i am a spread trader I keep adjusting legs or converting the entire spreads to some other combo… I will neither have time to post and explain all adjustments nor readers can figure out what i m doing…

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“TraderVenk”, you can change your alias to “TraderMonk” :smiley:

That is the whole point. We all have a search problem at the beginning of day.
What scrip? What price? What strategy? What stop? What Target? Then use our systems to find a solutions. Some are simple, and others complex.

If you can lucidly explain the market scenario, I am feeling that you may be having a simple entry / exit or spread adjustment systems. I am curious to what kind of spreads, and legs can create effective intraday strategies?

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I dont do intraday spreads

But if i m asked to choose one, I will go for

  • vertical spread because margins are low for vertical spreads
  • second they are primarily directional trades, so it could give good profitability intraday
  • third its least affected by implied volatility swings.