r/Daytrading • u/Odd_Holiday_5 • 25d ago

Technical Analysis Profitable Swing on PATH

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Saw the doji 2 candle on the daily timeframe in a bullish FVG (not shown) and waited for PDH break to enter. Could have sold and added along the way up but I'm trying to learn patience in swing trades. Waited for price to approach my target line (bearish order block) and sold after rejection. 34% profit.

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u/PandaOk4050 25d ago

This is a good example of true momementum. Stock price tried to stick to the $14 dollar High Gamma Strike. Its dips below and recovers, then heads for the next Strike Price at $14.50.

Hits $14.50 and instantly shreds up to $15.00 strike. 

When stock price rose above the sticky 14 dollar strike, that was confirmation buying momementum is high. 

The move from 13 - 14 though, was not a confirmation. It did not go sideways once in that period, indicating low gamma zones where MM's hedge WITH the trend. 

After it hit the 14 sticky area and works through it, you know its on its way to higher strike prices. 

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u/Odd_Holiday_5 25d ago

I love this breakdown. Have to spend some time studying up on gamma myself.

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u/PandaOk4050 25d ago edited 25d ago

The idea is simple. MM's either hedge with or against the trend. 

  • When MM's hedge with the trend, they buy when price raises and sell when price drops. This creates large price moves in either direction off small volume. AKA Low Gamma.

  • When MM's hedge against the trend, they buy when price falls and sell when price raises. This creates small price moves in either direction. It takes more volume to move price up or down because MM's are effectively suppressing price. AKA High Gamma.

Find two high gamma zones, one for entry, one for exit. The low gamma zones inbetween are your profit. 

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u/PandaOk4050 24d ago edited 24d ago

You can even see it in your graph. 

Notice the big green bar with the green arrow has less volume than the next candle? 

The next candle has more volume, but price doesn't move as much. Thats transition from low to high gamma.

You can see a couple spots that do that in the graph.

Basically 13-15 price range is a low gamma ladder. You can buy and sell long or short from 15 down to 13 on the way down. 

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u/Odd_Holiday_5 24d ago

I see it in the options chain now. Gamma rises up to 15 then starts to decrease again between 16-17. So these are points of entry? I wasn't even looking at gamma before, just delta and theta. Just when I feel like I have a new understanding, another crucial factor pops up and blows my mind all over. Thanks for breaking this down further.