Gap Up Short
Before You Start:
This set-up takes advantage of the so-called “gap and trap”
open. If the market gaps up through the upper Bollinger band, a short
trade would trigger when the price drops below the opening price and is
confirmed by a weakening TICK.
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| 1. |
Place your stop just above the
high point of the day. |
| 2. |
Or, use a money stop if the high
is too far away. (In this situation, you are not restricted to waiting
15 minutes. You have to be prepared before the open and know where
the overnight Globex high and low are.) |
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Click the image for a larger view. |
Look
at This Example Again:
The solid blue line is the opening price. As you can see, the market gapped
up and pierced the upper Bollinger Band. The TICK and PREM also went negative
early, giving additional confirmation. The short entry was below the opening
price. One of the best ways to be prepared and to get your entry is to use
a sell stop. |
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| Gap Down
Short
Before You Start:
The ES gapped down 1.3%, giving just a 60% chance of a gap fill. Patience
is key.
|
| 1. |
Wait 10 - 15 minutes for the overnight
orders to be filled. |
| 2. |
Take your entry on the cross below the opening
price with a 2-point stop. |
|
Click the image for a larger view. |
Look at This
Example Again:
The solid blue line is the opening price, and the entry was taken on a cross
below the opening price with a 2-point stop. Notice, once again, that a
sell stop is a great tool to get your entry. |
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Disclaimer: The strategies
are believed to be accurately presented. However, they are not guaranteed
as to accuracy or completeness. Nor is it guaranteed that using them will
result in profits or that they will not result in losses. Past performance
is not a guarantee of future results. Only risk capital should be invested
in the market. All investments and trades carry risk, and all trading decisions
of an individual remain the responsibility of that individual.
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