trading the gap with the ftse: 18th may

[tradeguy]

hi,

i'm having a bit of trouble understanding how to trade the gap?

this morning the ftse opened a bit lower. so how would i go about setting up a trade if the opportunity arises?

its probably too late now but if anyone could give me some pointers as an example for the this morning of 18th may that would be great.

many thanks!

 

[tomorton]

I've never heard of any method that sets up trades in anticipation of gaps so realistically you have to be talking about reaction after the event. Which means you're either trading in the direction of the gap or taking a position anticipating its closure. Gaps are a notoriously tricky chart event to trade partly because they inherently bring a big hole in price and volume data. Not recommended until conventional trading is consistently profitable.