Gap Plays

Quote from Lefty62151:


I use gap openings every day to trade futures. I can figure my own scans just fine. What interests me is what you see that causes you NOT to trade.
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I setup the esignal filter to show me gapping stocks with an average daily vol of at least 500K shares with a minmum price of $5 a share. I also have esignal sort by $ losers or by $ gainers. I play stocks that have gapped more than a $1 or thereabouts from previous close. If the scan doesn't turn up any stocks with this profile then I go back to sleep! The pre-market trading volume is not that important to me.

What is important is how the stock trades during the first minute (volume and velocity.) I use Time and Sales for that and I keep an eye on Level 2 to see if the orders are bunching up one way or another (hopefully so.) I really don't bother too much with charts ---never could figure out how all them scriggly lines could predict the future price of anything.

I know about NASDAQ's Most Active Pre-Market scans but it doesn't list the average daily volume which is really important to me ---I don't wanna be stuck with a thinly traded stock. And I'm too anxious as it is to go spend valuable time looking up all the average daily volumes. The basic esignal scan is only $50 a month!

I don't think what I do translates very well for futures but you are welcomed to try of course.


<-gapster->
 
Entry:
09:30:20 Long BIIB 2000 shares @ $38.34 (average cost)

Exit:
09:30:45 Sell BIIB 2000 shares @38.22


Profit/Loss on Trade: -$240 LOSS (commissions/fees not taken into account)


<-gapster->
 
Elan would have been a better choice then BIIB. They are partners on the drug that was in the news. The drug is a much larger part of Elans buisness though and caused a bigger move and a better gap play.
 
June 3rd, Friday:

I did a play on RIMM today and got out with a little over $500 gain. It is not how I usually play gaps so I don't want to post it.

Today was a great day to play the gaps @ the opening too...!


<-gapster->
 
From a PM:
*********** wrote on 06-02-05 08:58 AM:
Do you also keep a minimum amount of volume before making trade?
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watch the velocitiy of the price movement more than anything else. some of these opening gapping stocks are pretty violent (i.e. wildly short-term profitable) too.

if you watch the Time and Sales window you want to see things flying by in a rapid way with the price changing ALL IN THE SAME DIRECTION.

it is your job to go with this direction by opening your position as fast as you can.

kinda hard to explain it so best to just OBSERVE the openings of some of these gapping stocks via Time and Sales. there are a lot of head fakes too, so figure out the duds from the gems.

take some of the stocks from your pre-market scans and open each stocks' Time and Sales. Open up say 10 of them if you can...

...then watch how the T&S moves at 9:30am. You will notice that some don't do all that much and stay in a duldrum range, whereas others will fly like a rocket in a dominate direction. You want to be able to go LONG or SHORT in a heartbeat. That is why you want to play stocks that are on your broker's short list and also to go with a broker that lets you SHORT without the uptick rule. Alliance allows this. They also are a sponsor here at Elite.

After a while you may get a feel for the movement you want to be in on. if you don't see the prices dropping like marbles from a wet bag or flying out like in that "Missing" sci-fi flick, THEN DON'T PLAY THAT STOCK!!!!

Be aware that rapidly moving stocks (ie falling or rising more than $2 in less than a minute) are due for a sudden reversal when the big money makes their play. This is your sign to close your opening profitable position and possibly open a reverse position (SAR -Stop and Reverse.) This can all happen by 9:33am!

But go to my "Market Open Gaps School" first with the Time and Sales windows. Yea, this is the best way for you to learn this. Throw away those stupid charts too.


g'luck!

p.s. i just noticed your question could be interpreted in another way... i usually go with 1000 share lots.


<-gapster->
 
From a PM
********* wrote on 06-02-05 05:44 AM:
I have been paper trading the same gap plays that you are. I'm about to go live with Alliance and was wondering how you like it so far?
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There are problems with the DASTRADER platform offered by Alliance. Little irritating nuisances here and there.

I do have their live broker's toll free number pasted next to the trading computer but thankfully haven't had to use it yet.


<-gapster->
 
Quote from CasperCRF:

Elan would have been a better choice then BIIB. They are partners on the drug that was in the news. The drug is a much larger part of Elans buisness though and caused a bigger move and a better gap play.
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I made a mistake on BIIB. I'll admit that.

not to sound too harsh but....

I don't care about fundamentals, really. I don't even know what BIIB makes or what service it offers.

I like to:

1. Buy stocks whose prices are flying violently upwards at the open.

2. Short stocks whose prices are dropping violently like marbles at the open.

I think fundamentals are a waste of time. I think charts/TA is a waste of time.

Read the opening tape correctly then scalp the open if appropriate. Learn this skill and make money!


<-gapster->
 
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