I'm sorry for any confusion created by my previous reply. Allow me to clarify. With the "Gap Open" Method, I look for stocks that don't fill. Their price keeps chugging along in the direction of the gap without so much as a pullback for the first thirty minutes of the trading day. Any stock that experiences a pullback, reversal or simply flat lines before 10:00 AM, I remove from consideration. By 10:00 AM, most of the gap open stocks have failed to meet the above criteria leaving few (1 or 2) if any trade possibilities. At 10:00 Am, you simply buy the stock with the best chart (nicest stair step look). If price falls after your purchase, you exit immediately. If price continues to rise, you hold until price pulls back.
What follows is an extreme oversimplification, but should help to clarify the overall methods. With the ETF Trading Methods, one seeks to capture the daily move (up or down) of the market using the DIA, SPY or QQQQ (formerly QQQ). One buys at the open and sells just before the close. If the trend fails to continue in the direction of the open, you reverse position. Adding on extra shares during the afternoon session provides an opportunity to increase gains made during the morning or recoup losses experienced during a reversal. Often numerous reversals occur during the trading day. Reversing positions during the numerous market reversals requires increased speed to close one position and enter into an opposite one (sell your longs and then short). The increased need for speed requires automation to effectively reduce delay, human error, and slippage.
I hope that helped.
- Spydertrader