Trading the Gaps

[ranjha]

I have been watching you thread ... i am fairly new in trading started like 5 months ago and most of the time Gap Filling works... i will be trying this in Demo and watchin this thread from now on and will keep updatting if its working for me
:clap:

 

[robster970]

Ilir & I have different approaches and different criteria on when to take the trade, risk, etc. I think ilir likes to take something which is why he has two exits whereas I just go for the all/nothing approach. However I think I choose when to trade the gaps based upon circustances/fundamentals/news/sentiment whereas ilir just plays them all with a straight bat.

different horses for different courses.

incidentally, the level which triggered all the sell orders yesterday (32) provided support for the sell off after the nfp news. so I faded this and added to my swing trade

sometimes I just love the predicability of e-mini. other times it just baffles me.

 

[ilir.shkurti]

You are correct. I have gauged a specific success ratio in my approach, and in order for that to materialize, I take position preferably every day. Whereas straight gappers--you, Robster, by the sound of it--may choose to sit certain days out--I elect to take a position even on unlikely fill days. Rationale is, except on rare cases, price will assume a pro-closure behavior, be it premarket or at open. My targets and stops are adjusted accordingly. Gappers I know would not bother with my two point profit, but chase, and have the resiliency to hang for five, six points and much more. My mental conditioning is not at that point.

That said, I would like to say I do not go blindly about my entries. Sentiment in the market, price action of several preceding sessions, and key news releases all serve as confirmation, and often as deterrents to my participation. Today was a key release, the December unemployment numbers, which gave us a gap where there was none. I timed the volumes, t&s, and some old fashioned gut feeling that this closure was plausible. In the end, I entered, fully accepting that a stop would have been hit. Once I 'write the check out' for my stop, I am free to watch the trade develop. Today, it came within a point of hitting my stop, but instead turned around and hit both my targets, and believe me, it was tough to wait and see.

I fully expect my plays, and parameters, to improve to a level befitting my eventual experience.

 

[robster970]

I go down to 1pt ilir - all profits are good profits in gap trading. It was nice to see the gap open up - I had only set myself up for an entry on a pullback on my swing trade, the gap was a nice 3pt bonus for the weekend.

From the sounds of it, we trade the same mechanism but have different ways of playing the gap - everything you stated on how you trade them is how i trade them. I'm sorry if I sounded patronising, I thought you played them purely on a technical basis rather than the more considered approach you outlined.

 

[ilir.shkurti]

No issues here, I did not mean to sound defensive. I take all remarks here with the best of intentions, and treat it much like the market action: without taking it personally. If anything, I value counterpoints, especially from people in the know.

 

[robster970]

ok, so it's monday and the world digests chinese import and export news.

won't be trading the gap today.

 

[ilir.shkurti]

Short 1145.75

 

[robster970]

You have bigger cahonas than me my friend. It's been in a 4pt tight range since midnight.

 

[ranjha]

Ya true not a very good idea to trade gap today as news from china also came good market suppose to move up ..........but sitting and watchin if it breaks this sideways range either side

 

[ilir.shkurti]

First target filled, at 1143.75

 

[ranjha]

wow

 

[ilir.shkurti]

Closed second position same as first target, 43.75

 

[ranjha]

nice work i put in demo also sell position when it broke below 1145 range made some money

 

[robster970]

Good trade my friend. I reckon it will make the gap.

 

[ilir.shkurti]

I chickened out at the second target, but I do not feel as bad about it. Earnings season is starting and market is charged positively. Gap is a like a very slippery fish; you think you have it in your hands, but it can run without you unless you jump in even when half your 'dashboard' says to be careful. Trading gap is simple, not to be confused with easy.

 

[robster970]

You're right ilir but I'm still yet to see confirmation of any buying pressure........

I speak too soon.

 

[ilir.shkurti]

And self flagellation begins.... as my stillborn second target of 1142.50 would have been hit without setting my secondary stop at entry... If it isn't stops, there will be something else to lament about. But honestly, not regretting much this morning.

 

[ranjha]

Still waiting for the 2nd target to hit 1141.50

 

[ranjha]

target hit

 

[robster970]

Good work boys. Gap trading at it's finest.