Trading the Gaps

im impressed by you ilir do u use Fibonnaci to enter??
Because u just entered where it turned around
 
Not really, Ranja! Just had placed a limit there once it opened, and filled five minutes after I placed it.
 
how do u determine where to put your limit order in Gap play ??
i see most of the time it turns around wherever you put your limit order
 
I wish I could quantify it, but would take too many paragraphs without necessarily saying something useful. I would not say 'most' of my entries are when it turns, but definitely a healthy dose are right on the edge. My limits are discretionary in terms of their price level, though decision tree that leads to their submission is anything but. Eventually, I credit extensive screen time. I paper-traded the gap for over seven months before I got in live.
 
Originally thought that I'd sit out this one b/c of the fed IR hike, the CPI message, and the overnight drop and subsequent rise. Preopening looked bearish. Plus, I had a pivot and resistance that we had to get though to close the gap.

I decided to take a position long at 9:41 EST at 103.75. Not a good entry at all. Based my decision on breaking through my main pivot. Results: stopped out at 9:58 EST at 100.75.

On another note: removed all indicators and am plotting pivots, s/r, and trendlines only. Reading candlesticks and price only.

Great trading Ilir!
 
ranjha said:
i am in learning stage.. not sure where should i start from if i am playing Gap
Click to expand...

Decide on a strategy. So far (the day is young), Ilir and I made good calls. I have stayed out because I did not think the gap would close completely, Ilir has taken money today even in what may be a marginal situation.

There are no right or wrong ways of doing this. There are only profitable and unprofitable ways. You may come up with something that you are happy with that may be different to what Ilir and I do. You just need to experiment and learn.

e2a @ 16:10 GMT - looks like the gap might close after all - so ilir was right and I didn't lose any money.
 
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thanks Rob
But it always good to see what others are doing ........ and based on that i can make my strategy
 
m_cat12 said:
Originally thought that I'd sit out this one b/c of the fed IR hike, the CPI message, and the overnight drop and subsequent rise. Preopening looked bearish. Plus, I had a pivot and resistance that we had to get though to close the gap.

I decided to take a position long at 9:41 EST at 103.75. Not a good entry at all. Based my decision on breaking through my main pivot. Results: stopped out at 9:58 EST at 100.75.

On another note: removed all indicators and am plotting pivots, s/r, and trendlines only. Reading candlesticks and price only.

Great trading Ilir!
Click to expand...

Two questions, mainly for your own reflection:

1) Your initial analysis said no, so why did you change your mind? Impulse?

2) Why such a late entry?

Good on the indicators btw - never seen the point of having something that tells me what has happened in the past when I've got all the information I need in front of me with price.
 
robster970 said:
There are no right or wrong ways of doing this. There are only profitable and unprofitable ways. You may come up with something that you are happy with that may be different to what Ilir and I do. You just need to experiment and learn.
Click to expand...

Well said! Experiment, experiment, then experiment some more. Where I come from there is a [tailor's] expression that goes, 'Measure seven times, cut once!" Coming up with a good strategy is not an errand suitable for a deadline.

A lot of initial reactions on my trading method are that what I do is gambling, taking a position on every gap. I offer that it is the result of a long time of experimenting, during which I have [reasonably] discerned the limits of expectations, both on the method, the markets and myself.

I am the last person who would be labeled a gambler. I do not believe in luck, at least when it comes to entries. I believe in data, probabilities, and eventually, a degree of acceptable loss.

Coming from an analysis background and experience in building highly complex valuation models (trading is just another exercise in valuation, as you know), I had the initial tendency to over-analyze, basically rationalizing ways to stay out of the action (which to a young risk-averse trader is just too convenient). This is called 'paralysis by analysis.' Thus, later I modified my model, and adjusted for a very fundamental factor in all of this: the crowds. Setting aside the big guys (which do not day-trade, anyway), there are hordes of traders such as myself who simply will not react to a set of given factors in the same way as I will. Hence, my decision that every gap is playable, so long as I am aware of the 'flags.'
 
robster970 said:
Two questions, mainly for your own reflection:

1) Your initial analysis said no, so why did you change your mind? Impulse?

2) Why such a late entry?

Good on the indicators btw - never seen the point of having something that tells me what has happened in the past when I've got all the information I need in front of me with price.
Click to expand...


Good question(s). Seems like I got in my own way in this instance. Since I've been experimenting with the opening gap, I haven't been fully trusting my initial analysis. Mainly b/c my initial gap trades have not been adhering to my plotted s/r. I've been trading the gaps differently than my regular long/short trades throughout the day.

Almost like gap trading does not conform to my usual rules. I know now that I need to use my rules 'in addition' to the opening gap plays. And, be confident in my analysis.

Thanks a lot Rob for your reply! Much appreciated. Enjoy your weekend.
 
If it's any consolation I use the narrative of the day for providing context for the gap play, but the gap play itself conforms to no other aspect of my swing trading.

No probs for the feedback.
 
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