Trading the Gaps

I'm surpised you thought todays gap would fill because it was quite large at open (6 pts I think). I stayed away.
 
I did not think it would fill. But, I thought I could still fade. It is here where I like to differ from hardcore gap traders. I am ok with taking half, or even a quarter of a gap.
On that subject, first target filled at 3:12 at 1108.5. Second half of the position still cooking. shooting for 1107.25. Moved stop to one point profit. playing it tight, as today is a record for me holding an active trade. Simply closed computer down and read.
Btw, I hope this manner of posting trades addresses the retrospective trades jm99 pointed on Friday 🙂.
 
Ok, simply got bored, having held this trade since this morning. Exited second half of position at 1108.50 as well, for a cummulative transaction p/l of $100/ctr. Overall made $150/ctr gross today.
My trade journal will contain a special attaboy to myself for having endured apparent hours just one, ONE, tick away from stop on my second trade and still hanging on. It is a milestone in my still-young trading career, and I am excited, folks! Yes, I betrayed original target on second half, but let's face it, it is 3:39pm in my neck of the woods, and its approaching the no-zone for traders, so... the pat on the back goes on my trading journal nonetheless 🙂.
 
Today gap size seems right. Also, in light of yesterday's unfulfilled one, chances are better. However, 3rd quarter economic report comes out at 8:30am, and that could widen the gap as much as three or more points. I would like to assume position around the time that pressure eases off.
 
OK, seems I wrongly expected upward push, when opposite happened, and influence was much smaller than expected, gap narrowed slightly.
 
OK, folks, short of 1111.75 stopped at 1115.75 for a $150/ctr loss. Accoording to my management rules, this should be last trade for me today.
 
OK, one major report out as I was signing in, another coming at 9:55am (UM Consumer Sentiment). Will have to wait until that shakes up fully to decide on whether I will fade a gap that may or may not exist still.

Two consecutive gap misses makes today's a statistical yearning for fulfillment 🙂. This being a shortened week, however, introduces its own unpredictable variable into the mix. Positive reports today may lead the already reduced volume in the futures to keep upward momentum going. I will play with a reduced position if I get in today.
 
Bit the bullet, went short at 1118.75, stop at 1121.75, first target 1116.25, second target 1115.5. Let's see how it cooks.
 
Today the gap was greater than 4pt and the 1330 news was quite positive even though the reactions in the first 5 mins were mixed with no significant movement. I chose to stay out but am long on a swing play. See you next year. 🙂
 
ilir.shkurti said:
And that is my holiday gift to the market. Position stopped, gap play over for the week.
Click to expand...

I have been reading your gap plays and am very interested in this strategy. It seems that you switched how you were trading them in December because you started consistently making the same amount of money. You must have had a fixed target instead of basing it on gap fill. My question is do you think going for the fixed partial gap fill is more or less profitable than going for complete gap fill and getting a big winner less of the times? Was your stop consistently the same? You seem to have not got stopped out very much. Also, what is your strategy for when to enter? Sometimes it seems like you went in pre-market and sometimes waited 10 minutes or so.

Thanks for sharing all of this information. I recently switched from stock trading to futures and see so much potential in this.
 
Dfenn,

I assume you have taken a look at my Google spreadsheet. The spreadsheet reflects actual profits on at least one contract or portion of my position, and the gross profit/loss represents my full target/stop. What it does not take into account is my scaling out of portions of my position before my full target is hit for the day. My stop is a consistent one, and I modified its size a few months back, fine-tuning it based on my experience. Your observation on targets is also correct. Recently, I have been consistent on my targets. Although I still shoot for full gap, there is a cost to hanging around for the gap to fill, depending on conditions. Taking a target less than gap increases the likelihood of achieving the target, and reduces the likelihood of the stop being hit. I have actually already discussed in some detail my strategy, both in this thread and in the blog whose link I have provided in the starting post. Most of my entries are premarket.
 
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