trading gaps
- Thread starter gdtrader
- Start date
I trade the opening gaps each morning either short or long depending on the chart of the stock that meets my initial criteria. If you are just starting out, you can use the MSN Stock Screener to locate a universe of stocks based on your preferred methods. Here is the link:
[url]http://moneycentral.msn.com/investor/finder/customstocks.asp
[/url]
Make sure you download the small plug in for the 'Deluxe' Screener.
The http://www.tradingfrommainstreet.com/ web site also has some good education on the subject.
A few points to get you started:
1. Volume - thinly traded stocks can make for difficult entry and exits. Try to avoid low volume stocks.
2. Price - Low priced stocks are easier to manipulate. While there are those that frequently profit trading low priced equities. The novice trader should avoid low priced stocks.
3. Time - When to buy (or short) is as important as which stock to purchase. As I am sure you are aware, most 'Gap' stocks reverse or 'fill' part or all of the initial gap in price. While this reversal can be a great source of profit. The novice trader should master trading with the trend before advancing to reversals. The key to successfully trading 'gap openings' is to locate those stocks that don't fill.
4. Exits - Having a proper exit strategy BEFORE entering into the trade is extremely important. Do not allow your greed to cause you to exit too late, or fear to cause you to exit too early once you are 'in the market'. Trailing stops are a good protection for profits.
5. Always, Always, Always practice good money management techniques - The sharper your money, and risk management skills become, the more profitable you will be.
You may want to start with stocks that gap up or down by a certain percentage to get an initial universe. Then trim the universe down to a manageable 'watch list' by adding criteria you find important.
Hope you find the above information useful.
[url]http://moneycentral.msn.com/investor/finder/customstocks.asp
[/url]
Make sure you download the small plug in for the 'Deluxe' Screener.
The http://www.tradingfrommainstreet.com/ web site also has some good education on the subject.
A few points to get you started:
1. Volume - thinly traded stocks can make for difficult entry and exits. Try to avoid low volume stocks.
2. Price - Low priced stocks are easier to manipulate. While there are those that frequently profit trading low priced equities. The novice trader should avoid low priced stocks.
3. Time - When to buy (or short) is as important as which stock to purchase. As I am sure you are aware, most 'Gap' stocks reverse or 'fill' part or all of the initial gap in price. While this reversal can be a great source of profit. The novice trader should master trading with the trend before advancing to reversals. The key to successfully trading 'gap openings' is to locate those stocks that don't fill.
4. Exits - Having a proper exit strategy BEFORE entering into the trade is extremely important. Do not allow your greed to cause you to exit too late, or fear to cause you to exit too early once you are 'in the market'. Trailing stops are a good protection for profits.
5. Always, Always, Always practice good money management techniques - The sharper your money, and risk management skills become, the more profitable you will be.
You may want to start with stocks that gap up or down by a certain percentage to get an initial universe. Then trim the universe down to a manageable 'watch list' by adding criteria you find important.
Hope you find the above information useful.
Hello gdtrader, CB has an opening gap program for the ES that will be fully automated soon (or you will be able to trade the signals manually if so desired). Contact me by PM or check profile for website.
Pete
Pete
I only trade stocks that gap up or down by at least 1%-a lot of times these stocks have some sort of good or bad news. What I like about these stocks is that they tend to be big movers throughout the day (see HIG and BBY today for two good examples). However, they can be extremely volatile during the first thirty minutes-ATH and MME both dropped more than $2 during the first twenty minutes of trading yesterday. One of the things I really try to stay on top of is how the overall market is interpreting good news and bad news. After the market bottomed in March, many stocks (not all) that had bad news would gap down, but then rally from the open. Lately, many (once again not all) stocks which have what seems like good news gap up on the open, but then go into free fall right after opening. Hope this helps somewhat.
Also, Spydertrader brought up some very good points in his post.
Also, Spydertrader brought up some very good points in his post.