Daytraders: Fading the Gap

[agatto2]

Hay G  whats your fad trigger? 10%. I have never shorted but my account has been upgraded to a margin,,, so im looking to learn. Thanks    Tony  G

[eliteG]

Hey agatto2, these gap fades are very rule specific plays which make them, in my opinion, extremly safe and almost easy.  I'll break it down for you:

1.  Find gapping stocks
          -I like to find stocks that have gapped up and fade that gap, or short them but you can do the opposite with stocks that have gapped down and fade them long.

2.  I look for the gap to go outside of the BB(Bollinger Bands), $10-$40 price range, at least 200,000 volume at that time of day which is almost right at open.  This gives you a fast exit(liquidity)

3.  Some people use the break of the first 5-min bar to go short or you can use an inside candle that forms(i like this way a lot)

4.  trigger is immidiate break of that 5min bar low, or inside bar low

5.  stop is very tight, high of day at that point or top of inside candle.

6.  target is the close of the gap but you dont need to wait for all of it since it can be a huge gain anyway.  take 1/2 profits if you feel support coming on.

7. these play usually dont last more than 1.5 hours and I have had plays that only last a few min.

8.  this is an awesome tool to every traders arsenal 

[eliteG]

 

[mix_master_mike]

GREAT find today Mr. G!

[eliteG]

thx Mr. Mix 

[eliteG]

BAM!

[eliteG]

wow almost completely faded!  a 6.6% move (short @ 17.90) a great fade!

[eliteG]

couldnt find any fades for today, any luck mix?

[atl_trader]

I find gaps using Realtick or just in yahoo.  Many sights show the morning gaps.

then a quick visual on the chart... today I'll just post the intraday fades that worked... something to study 

Here's what I use:
http://www.trade-ideas.com/Help.html#wsf_MinGUD

I also like false gap retracements as these often indicate a good direction:
http://www.trade-ideas.com/SingleAlertType/FGUR/False_gap_up_retracement.html

[atl_trader]

I will try to post something here today.  Anybody else have any gap fades?

Here's a list of recent ones:
http://www.trade-ideas.com/SingleAlertType/GUR/Gap_up_reversal.html

This one was pretty amazing from Tuesday - especially the continuation after crossing the open:
Y 07/12/2005, 03:57:32 PM Gap reversal, Gap=+1.25, 1.01 gap continuation.

[eliteG]

Hey atl_trader  (I'm in atlanta too)

Thx for the links.  Can you tell me how you use these trade ideas alerts?  Just for study or do you get realtime gap fade alerts?

I checked the links and it seems that a lot of these don't have the volume or the neccessary gap distance is that something you can set for it to look for.

coo 

[mix_master_mike]

elite, again, great find monday. I really haven't been watching too much this week because here in Detroit we had the MLB All-Star game. So I've been playing a little hookey and getting to work late the last couple of mornings with all the festivities. I'll post some finds tomorrow morning. Happy trading and good luck today sir!

[eliteG]

yo mike...cool 

BWLD...entered the gap
ATRS, ELOS too

[atl_trader]

Hey atl_trader  (I'm in atlanta too)

Thx for the links.  Can you tell me how you use these trade ideas alerts?  Just for study or do you get realtime gap fade alerts?

I checked the links and it seems that a lot of these don't have the volume or the neccessary gap distance is that something you can set for it to look for.

coo 

That's great! I keep things moving in Midtown on Peachtree.

That's how I use the system ... I pick those alerts and then I can make all kinds of filter requirements based on volume (daily, current relative volume, etc.) or volatility or base on price (position in daily range, year range, MAs, etc.)

I dont think you'll see all the symbols in this alertwindow without signing up for the trial, but this is what I am looking at this morning:
http://www.trade-ideas.com/View.php?O=18300000000_3d_0&QGUR=.25&QGDR=.25&QFGDR=75&QFGUR=75&MaxPrice=66&MaxSpread=10&MinVol=300000&MinRV=1.4&WN=Gap+Alerts+on+Volume

[atl_trader]

Hey agatto2, these gap fades are very rule specific plays which make them, in my opinion, extremly safe and almost easy.  I'll break it down for you:

1.  Find gapping stocks
          -I like to find stocks that have gapped up and fade that gap, or short them but you can do the opposite with stocks that have gapped down and fade them long.

2.  I look for the gap to go outside of the BB(Bollinger Bands), $10-$40 price range, at least 200,000 volume at that time of day which is almost right at open.  This gives you a fast exit(liquidity)

3.  Some people use the break of the first 5-min bar to go short or you can use an inside candle that forms(i like this way a lot)

4.  trigger is immidiate break of that 5min bar low, or inside bar low

5.  stop is very tight, high of day at that point or top of inside candle.

6.  target is the close of the gap but you dont need to wait for all of it since it can be a huge gain anyway.  take 1/2 profits if you feel support coming on.

7. these play usually dont last more than 1.5 hours and I have had plays that only last a few min.

8.  this is an awesome tool to every traders arsenal 

I just reread these rules - thanks for putting them on 'tablets' and bringing them down the mountain!  Great traders always have a plan and rules to live and die by - I think what's here is great stuff.  I even tried to model it and think I came close.  Without a trial you'll only see a few of the symbols that come through:
http://www.trade-ideas.com/View.php?O=804002c000000010100000020_3d_0&QNLPF=1&QGUR=.25&QFGUR=51&QPFH75=.25&QPFH25=.25&QRDI=2&MinPrice=10&MaxPrice=40&MaxSpread=10&MinVol=200000&MinRV=1.4&MinGUD=.25&MinBoll=99&MaxCount=20&WN=EliteG+Fade+the+Gap+Alerts