Trading Gaps and Breakouts (Stocks)
- Thread starter Brandonf
- Start date
[12:32] <brandon> this is the daily chart of INTU
[12:32] <brandon> and the intraday one minute
[12:32] <brandon> first on the daily you can see we have a very nice trap that was shapping up
[12:33] <brandon> a trap occurs when the prior day the stock opens on the high and closes on the lwo
[12:33] <brandon> and it has range expansion
[12:33] <brandon> then if it goes above the prior days high the next day
[12:33] <brandon> the trap is in
[12:33] <brandon> this is one of the very best setups out there
[12:33] <brandon> you can next see that we have a very good gap on the charts
[12:33] <brandon> so we have some energy in the stock
[12:34] <brandon> INTU does not work to fill in its gap
[12:34] <brandon> and given that the saying "Gaps fill" is generally true
[12:34] <brandon> then this is a signal that we want to watch this stock
[12:34] <brandon> because its strong
[12:34] <brandon> so wait for a line to form
[12:34] <brandon> a breakout point
[12:34] <brandon> and thats that
[12:34] <brandon> something that I want you guys to really notice
[12:34] <brandon> and its very important
[12:34] <brandon> how much we do the same stuff over and over again
[12:35] <brandon> I pass on tons of stocks
[12:35] <brandon> things that are moving like crazy and I will never get them
[12:35] <brandon> because the best way to trade is to specialize in one thing
[12:35] <brandon> and do it over and over
[12:35] <brandon> guys on the floor try to buy at 1 and sell at 2 and if they cant sell at 2 then try to scratch it
[12:35] <brandon> or they do some spreading
[12:35] <brandon> and none of it is sexy
[12:36] <brandon> but it can be profitable (less so now with all the Elect. stuff coming online)
[12:36] <brandon> but you as a screen based trader want to be doing the same sort of thing
[12:36] <brandon> not buying at 1 and selling at 2
[12:36] <brandon> but just specialise
[12:36] <brandon> each thing you do will have strengths and weakness
[12:36] <brandon> you have a relationship with it
[12:36] <brandon> Toni does stuff that drives me crazy but I still lover her
[12:36] <brandon> a setup will be the same
[12:37] <brandon> there will be drawbacks too it
[12:37] <brandon> but if the overall strengths for you outwiegh those
[12:37] <brandon> then you have something
[12:37] <brandon> but the best way to be profitable
[12:37] <brandon> is to be really boring
[12:37] <brandon> the same stuff again and again and again
[12:37] <brandon> make sense?
I read in one of the traderâs magazines just recently, I forget which one, that did a study on gaps. Now, they recommended that they best time to fade the gap is at 9:36AM EST (when the majority of reversal move begins thereby giving room for it trend away from the gap and then start the snap back to the gap) if its still open and to close out by 10AM (roughly). I think their studies showed that if it hasnât filled by then, that the probability of it filling are less likely.
Have you run a study like that, Brandon? Initiate a gap fade play at 9:36AM and have stops determined by time, profit objective (the closing of the gap), and max acceptable risk. Do you think that this will increase the risk to reward ratio and increasing probability of success?
Have you run a study like that, Brandon? Initiate a gap fade play at 9:36AM and have stops determined by time, profit objective (the closing of the gap), and max acceptable risk. Do you think that this will increase the risk to reward ratio and increasing probability of success?
Here is a class I gave some time ago on trading (fading) Index gaps. I have a mechanical system that does fad gaps a few minutes into the day, but for the most part I like to have good statistical info and then apply discretion to it.
http://www.tradingfrommainstreet.com/ETGaps.html
Brandon
http://www.tradingfrommainstreet.com/ETGaps.html
Brandon
Spend every trading day free for two weeks with Me with me in my virtual trading room as Toni, Myself and our assistants track and trade stocks and emini's!
Each day in the TFMS Live Trading Rooms is like going to an expensive stock market seminar with two exceptions: Everything we teach works, and we prove it to you day after day in REAL TIME. After reach trade is completed a a chart of the entire trade is posted and a thorough explanation of the trade takes place to insure that you profit not only in the market, BUT IN YOUR MIND AS WELL. After the explanation you will be free to ask any remaining questions you have, nothing is off limits with us, all questions will be addressed.
Be privy to our live market commentary explaining our thought processes as the day moves on and we develop and implement our strategy. We will you through market action during all the active periods to insure you are not getting hurt and are in a position to profit as soon as our opportunities appear. You will lean how a professional evaluates opportunities as they come along, and once the evaluation is done how it is put into action. We will post charts of the markets action and our trades which show the reason for the trade and its progress from start to finish. Nothing is left out and we don't hide behind best case numbers like most other rooms. You will be able to go back and review the charts yourself along with the lesson that is given for the trade. Additionally, unlike most other rooms Toni and I are available throughout the day via private message to help you one on one with trades. In addition to this we have a steady membership base of long term members, most of whom are willing to spend time sharing their experience and helping you.
As a member of either or both of the TFMS Live Trading Rooms you will learn
-How to find the high percentage setups that occur every day in the market. Most traders shoot from the hip and sadly their trading accounts show this fact very clearly. You will learn how we take advantage of the market when it is trending up, down or sideways.
-When to trade and when to sit. One of the most important lessons, and one that unfortunately due to relationships with brokerage firms and other factors most trading services have a vested interested in NOT teaching you. The simple fact is that being a day trader does not mean trading every single day: Knowing which days to trade and which days to sit aside before the market is closed can literally save you hundreds of thousands of dollars per year.
-How to trade the gap. Simply stated a gap is the most powerful event on a chart, but most people haven't a clue as to how to take advantage of it. Being able to apply this one nugget of knowledge, which you are exposed to every day in the TFMS Rooms, can make you millions of dollars.
-How to incorporate multiple timeframes into your trading. Most traders are so busy looking at their 1 minute and 5 minute charts that they neglect the big picture. Even those that do look at bigger timeframes tend to do it in the wrong way, costing them money and opportunities every day. We will show you how to have the larger potential gain of the bigger timeframes, but take the smaller risk which is found only in the smaller timeframes, on all of your trades. This too can make you hundreds of thousands, if not millions of dollars.
-Money Management. Most traders use either too much, or not enough leverage in their trading. A mistake in money management can seriously reduce your chance of success even if every other part of your game is in perfect order.
I look forward to meeting you and sharing my hard won knowledge with you each and every trading day. Regardless of your being a new trader just learning, or are currently trading professionally and would like to improve your skills the TMFS Live Trading Rooms are the one place you are sure to learn the proper skills that give you a chance this competitive market.
After your free trial, if you like what your investment will be less than $10 a day.
I have a number of threads on ET which give an example of the type of stuff we do.
http://www.elitetrader.com/vb/showt...=&threadid=8127
http://www.elitetrader.com/vb/showt...&threadid=15168
http://www.elitetrader.com/vb/showt...&threadid=14135
http://www.elitetrader.com/vb/showt...&threadid=16332
http://www.elitetrader.com/vb/showt...&threadid=10439
http://www.elitetrader.com/vb/showt...=&threadid=7920
http://www.elitetrader.com/vb/showt...=&threadid=6795
Free trials can be found at https://secure13.dellhost.com/~D300....asp?o_path=1&o_service=1&o_member=0&q_srid=7
Brandon
Each day in the TFMS Live Trading Rooms is like going to an expensive stock market seminar with two exceptions: Everything we teach works, and we prove it to you day after day in REAL TIME. After reach trade is completed a a chart of the entire trade is posted and a thorough explanation of the trade takes place to insure that you profit not only in the market, BUT IN YOUR MIND AS WELL. After the explanation you will be free to ask any remaining questions you have, nothing is off limits with us, all questions will be addressed.
Be privy to our live market commentary explaining our thought processes as the day moves on and we develop and implement our strategy. We will you through market action during all the active periods to insure you are not getting hurt and are in a position to profit as soon as our opportunities appear. You will lean how a professional evaluates opportunities as they come along, and once the evaluation is done how it is put into action. We will post charts of the markets action and our trades which show the reason for the trade and its progress from start to finish. Nothing is left out and we don't hide behind best case numbers like most other rooms. You will be able to go back and review the charts yourself along with the lesson that is given for the trade. Additionally, unlike most other rooms Toni and I are available throughout the day via private message to help you one on one with trades. In addition to this we have a steady membership base of long term members, most of whom are willing to spend time sharing their experience and helping you.
As a member of either or both of the TFMS Live Trading Rooms you will learn
-How to find the high percentage setups that occur every day in the market. Most traders shoot from the hip and sadly their trading accounts show this fact very clearly. You will learn how we take advantage of the market when it is trending up, down or sideways.
-When to trade and when to sit. One of the most important lessons, and one that unfortunately due to relationships with brokerage firms and other factors most trading services have a vested interested in NOT teaching you. The simple fact is that being a day trader does not mean trading every single day: Knowing which days to trade and which days to sit aside before the market is closed can literally save you hundreds of thousands of dollars per year.
-How to trade the gap. Simply stated a gap is the most powerful event on a chart, but most people haven't a clue as to how to take advantage of it. Being able to apply this one nugget of knowledge, which you are exposed to every day in the TFMS Rooms, can make you millions of dollars.
-How to incorporate multiple timeframes into your trading. Most traders are so busy looking at their 1 minute and 5 minute charts that they neglect the big picture. Even those that do look at bigger timeframes tend to do it in the wrong way, costing them money and opportunities every day. We will show you how to have the larger potential gain of the bigger timeframes, but take the smaller risk which is found only in the smaller timeframes, on all of your trades. This too can make you hundreds of thousands, if not millions of dollars.
-Money Management. Most traders use either too much, or not enough leverage in their trading. A mistake in money management can seriously reduce your chance of success even if every other part of your game is in perfect order.
I look forward to meeting you and sharing my hard won knowledge with you each and every trading day. Regardless of your being a new trader just learning, or are currently trading professionally and would like to improve your skills the TMFS Live Trading Rooms are the one place you are sure to learn the proper skills that give you a chance this competitive market.
After your free trial, if you like what your investment will be less than $10 a day.
I have a number of threads on ET which give an example of the type of stuff we do.
http://www.elitetrader.com/vb/showt...=&threadid=8127
http://www.elitetrader.com/vb/showt...&threadid=15168
http://www.elitetrader.com/vb/showt...&threadid=14135
http://www.elitetrader.com/vb/showt...&threadid=16332
http://www.elitetrader.com/vb/showt...&threadid=10439
http://www.elitetrader.com/vb/showt...=&threadid=7920
http://www.elitetrader.com/vb/showt...=&threadid=6795
Free trials can be found at https://secure13.dellhost.com/~D300....asp?o_path=1&o_service=1&o_member=0&q_srid=7
Brandon
[13:24] (trikieone) brandon does it ever get to a point where it basses to long
[13:26] (brandon) thats a good question trikienone
[13:26] brandon and it does get to that point eventually
[13:27] brandon think of a base like a ledge on a cliff
[13:27] brandon or a porch you put off your house
[13:27] brandon you have to have support beams
[13:27] brandon it can only go out so far
[13:27] brandon or it will collapse
[13:27] brandon and a base is the same
Brandon
[13:26] (brandon) thats a good question trikienone
[13:26] brandon and it does get to that point eventually
[13:27] brandon think of a base like a ledge on a cliff
[13:27] brandon or a porch you put off your house
[13:27] brandon you have to have support beams
[13:27] brandon it can only go out so far
[13:27] brandon or it will collapse
[13:27] brandon and a base is the same
Brandon
This thread has gotten to be pretty long, so Im basically going to let it go. If you do have some questions specific to a stock you are watching etc please do feel free to ask here and I will reply. I will now be posting on my new thread "The pump and dump thread" with real time trading ideas, most of which come from gaps.
http://www.elitetrader.com/vb/showthread.php?s=&threadid=17118
http://www.elitetrader.com/vb/showthread.php?s=&threadid=17118
[10:20] <brandon> This is basically my std gap and go setup
[10:20] <brandon> the best kind of gaps are large ones.
[10:20] <brandon> The bigger they are the more energy is being put out
[10:20] <brandon> the less likely they are to fill
[10:20] <brandon> this does not mean to buy in right off the bat though
[10:20] <brandon> coz nothing moves in a straight line
[10:20] <brandon> everything needs its rest
[10:21] <brandon> so you wait on a setup
[10:21] <brandon> if you dont have this imprinted in your mind, write it down and paste it to a monitor.
[10:21] <brandon> DONT FADE LARGE GAPS.
[10:21] <brandon> TRADE BREAKOUTS IN THE DIRECTION OF LARGE GAPS.
[10:21] <brandon> if you just do this
[10:21] <brandon> you'll make money on this one setup
[10:21] <brandon> even in the crappiest market
[10:22] <brandon> so with NVDA we have the big gap
[10:22] <brandon> now we wait for the rest
[10:22] <brandon> you can see that it held up and based near its highs for an hour or so this morning
[10:22] <brandon> then we bought the breakout
Brandon
[08:53] <Brandon> Something that you want too do
[08:53] <Brandon> I have always thought
[08:53] <Brandon> is that if you want to trade
[08:53] <Brandon> you need to work with one or two setups
[08:53] <Brandon> dont be the "jack of all trades and master of none"
[08:53] <Brandon> because in the end what you really are is the master of none
[08:53] <Brandon> you will do much much better to find a few setups you are comfortable with
[08:54] <Brandon> and become very good at them
[08:54] <Brandon> there will be times that setup is not working
[08:54] <Brandon> and then you are just going to have to stand aside
[08:54] <Brandon> but overal l
[08:54] <Brandon> one setup will take care of you when your starting
[08:54] <Brandon> once you know one
[08:54] <Brandon> get a second under your belt
[08:54] <Brandon> a third etc
[08:54] <Brandon> but generally you want to stay with a small number of setups you know very well
[08:54] <Brandon> you know them inside and out
[08:55] <Brandon> so that the setup that looks great to the jack of all trades
[08:55] <Brandon> you can say
[08:55] <Brandon> hmmm
[08:55] <Brandon> something is off
[08:55] <Brandon> because you know this setup
[08:55] <Brandon> well for me one of those setups is off the gap
[08:55] <Brandon> and one thing i really like to see is a large gap up
[08:55] <Brandon> and then for that gap not to be filled
[08:55] <Brandon> Most gaps fill
[08:55] <Brandon> and those that dont fill are telling you something
[08:56] <Brandon> most likely they are screaming to you that they are strong
[08:56] <Brandon> and you should watch them
[08:56] <Brandon> you dont want to just go and buy
[08:56] <Brandon> you have to have a setup
[08:56] <Brandon> the stock needs to rest
[08:56] <Brandon> and that rest best occurs with a sideways base
[08:56] <Brandon> that is what we see here with SONE
[08:56] <Brandon> it had a very strong gap up at the open
[08:56] <Brandon> and then it based in a sideways manner for some time
[08:56] <Brandon> allowing it to rest
[08:57] <Brandon> when it broke above 7.57 which was the high of the base
[08:57] <Brandon> we had our long setup
[08:57] <Brandon> and with $8.00 being whole number resistence
[08:57] <Brandon> that was the logical target area
[08:57] <Brandon> just under 8
[08:53] <Brandon> I have always thought
[08:53] <Brandon> is that if you want to trade
[08:53] <Brandon> you need to work with one or two setups
[08:53] <Brandon> dont be the "jack of all trades and master of none"
[08:53] <Brandon> because in the end what you really are is the master of none
[08:53] <Brandon> you will do much much better to find a few setups you are comfortable with
[08:54] <Brandon> and become very good at them
[08:54] <Brandon> there will be times that setup is not working
[08:54] <Brandon> and then you are just going to have to stand aside
[08:54] <Brandon> but overal l
[08:54] <Brandon> one setup will take care of you when your starting
[08:54] <Brandon> once you know one
[08:54] <Brandon> get a second under your belt
[08:54] <Brandon> a third etc
[08:54] <Brandon> but generally you want to stay with a small number of setups you know very well
[08:54] <Brandon> you know them inside and out
[08:55] <Brandon> so that the setup that looks great to the jack of all trades
[08:55] <Brandon> you can say
[08:55] <Brandon> hmmm
[08:55] <Brandon> something is off
[08:55] <Brandon> because you know this setup
[08:55] <Brandon> well for me one of those setups is off the gap
[08:55] <Brandon> and one thing i really like to see is a large gap up
[08:55] <Brandon> and then for that gap not to be filled
[08:55] <Brandon> Most gaps fill
[08:55] <Brandon> and those that dont fill are telling you something
[08:56] <Brandon> most likely they are screaming to you that they are strong
[08:56] <Brandon> and you should watch them
[08:56] <Brandon> you dont want to just go and buy
[08:56] <Brandon> you have to have a setup
[08:56] <Brandon> the stock needs to rest
[08:56] <Brandon> and that rest best occurs with a sideways base
[08:56] <Brandon> that is what we see here with SONE
[08:56] <Brandon> it had a very strong gap up at the open
[08:56] <Brandon> and then it based in a sideways manner for some time
[08:56] <Brandon> allowing it to rest
[08:57] <Brandon> when it broke above 7.57 which was the high of the base
[08:57] <Brandon> we had our long setup
[08:57] <Brandon> and with $8.00 being whole number resistence
[08:57] <Brandon> that was the logical target area
[08:57] <Brandon> just under 8