Ideas for increasing trader performance

Why don't the BBC re-hire that guy, i'm sure all those black feminist lesbian lefties would love it.

That guys spits good game.
"You look like the kind of girl that gives out kisses and hugs"
Im gonna try that one out in town tonight.

Oh yes, he's got the lines alright. What a player.

Thought I'd make another post on these gap trades just incase there is anyone out there that is not making money on this yet.

I crunched a lot of numbers this weekend on most of the pairs I trade.

Here are the stats for the EUR/USD. It only takes an hour or so for each pair to get this kind of data and it is well worth doing. You can go back as long as you feel is statistically valid. I've gone back just 26 weeks (approx 6 months) in the data attached.

A few assumptions from the data which is contained in the attached image.

i) The EUR/USD gaps 61.5% of the time. I consider a gap to be a difference between the Friday close and the Sunday open of more than 10 pips.

ii) 100% of all these gaps recorded filled, eventually. That is to say, the odds are 100% from the data collected, that it is profitable to fade an opening gap. There is the element of time to consider here (hence the word, eventually) Only 37.5% filled in the first 2 hours of trading (i.e. before Midnight GMT) but 75% filled within 24 hours.

What is very interesting to note from the data is that the R:R is actually quite favourable on these trades. Less than 1 in every 5 trades is it necessary to have a bigger stop than a target (i.e. the fill) in order to make profit.

That is to say, one could use a stop which is, at the max, equal to the target (1:1) and make profit over 80% of the time.

iii) Upon filling the gap, the market reverses back in the direction of the gap, 94% of the time. 81% of the time there is a full reversal back to the price the market opened which gives some credibility to the assumption that there was a fundamental reason that the market gapped. It is also worth noting that the other 13% of the time there is at least a partial reversal. Interestingly enough, the only two partial reversals occurred when there was the biggest gaps indicating that if the market can fade such a large move, then there is going to be more follow through...The R:R stats for the reversals are even better than the gap trades with only just over 1 in 10 trades needing a bigger stop than target.

Read from it what you will and I hope some of you find this useful.

All the best,

Tom

Thanks Tom - I found this very helpful, and it's improved my trading quite a lot.

Thanks for sharing man!

I think you forgot to put "worst" between "the" and "play" . Sorry for bumping this old thread but that call was so exactly wrong that I had to bring it up.

You should have seen his Gold call.