Gap Plays

Discussion in 'Journals' started by gapster, May 31, 2005.

  1. gapster


    09:33:01 Long TIBX 5000 shares @ $5.70

    09:39:35 Sell TIBX 2500 shares @ $5.88 = +$450

    09:42:50 Sell TIBX 2500 shares @ $5.93 = +$575

    Profit/Loss on Trade: +$1025.00 (commissions/fees not taken into account)

  2. gapster


    09:33:59 Long AFFX 1000 shares @ 52.18

    09:38:47 Sell AFFX 1000 shares from $52.85 to $52.80

    Profit/Loss on Trade: +$655.65 (commissions/fees not taken into account)

  3. Interesting - can you share why you select the stocks you do out of all the gaps for the day? It appears you are making one trade a day, and Nasdaq issues only?

  4. jsmooth


    I've also used this strategy numerous times and it works pretty well (i think my approach is slightly different from gapster though) have to use NAS stocks because they tend to always come back to fill the gaps....i think i remember reading somewhere it's because of all the market makers

    I usually just watch CNBC about 30 mins before open and look for NAS stocks that are going to gap up or down at open (i usually always look for those gaping up - simply because its easier to trader and hold onto good companies, and stocks that are priced over $50). I like stocks priced over $50 because i want a stock that will easily move 60-70 cents in a short period of time, a move like that for a cheap stock is way to difficult unless they are reversing a trend. When the market opens i'll usually just try to go with the trend to get a small profit (15-20 cents) then close out the position and wait for the stock to peak and fall back to fill the gap, then once the gap gets filled i go long and it usually tries to re-test the high. Also, i dont short the stock down as it fills the gap because there is too much risk in shorting a strong stock...there will also be a lot of buying presure at the gap and you'll most likely get a shitty order fill if your short and trying to cover a strong stock....also, i only use stocks that are very active in pre-market because their daily volume will be high, their spreads will be tighter, and they'll show a strong trend either up or down.

    There are a lot more ways to play the gap, PM if you want some more strategies i use.
  5. Uh, I don't want to be confrontational but this statement is not even close to being true. And, hopefully no one will read it and think it is.

    Gapster, I would like to know how you choose from the daily universe also. It looks like you are in and out for a quick hit. Good journal so far, but would like to know more on your thought process.
  6. If we are talking on an intraday basis, you are correct. In fact, I would say on any given day the majority don't close the gap. Maybe the previous poster was talking about long-term.

    As you said, Gapster is trading on a short-term (minutes) basis. That is what I am interested in finding out more about.
  7. jsmooth


    yea i was talking about a longer time frame compared to gapstar.....i've been told by a few people that the NASDAQ comp pretty much always fills gaps though...has anyone else heard this theory before?
  8. gapster


    All my gap plays are NASD listed stocks. Why? because that is what my esignal Pre-Market scanner filters on.

    I live here in Hawaii and I wake up @ 3:15am (that's 9:15am EST folks!) to run my esignal scanner and watch it update in real time for about ten minutes or so or even up to the last few seconds before market open. Then I make my decision for my market open play.

    I usually am out by 4am or so (that is 10am EST). Why? Because I want to go back to bed! Hahaha. It's pretty much true tho'.

    I make sure my equity selection is shortable (I use DASTRADER/Alliance - no short uptick rule via ARCA!).

    Most times after the market opens I watch the prices move for the first minute or so and based on what I see I decide then to go long/short.

    I also have my real-time portfolio window on my desktop ---I just won't take more than a -$200 hit on it. My profit target is +$1000 on each play which again I check on the real-time portfolio window. I also may exit before the target if the price is hitting a "wall" (resistance) somewheres.

    I just do one play a day max. Sometimes I don't trade either based on what I see on the esignal pre-market scanner.

    I try to keep this whole process as simple as possible. So far it's been working just fine, thank God.

  9. Hello:

    I use gap openings every day to trade futures. I can figure my own scans just fine. What interests me is what you see that causes you NOT to trade.

    I appreciate any comment you might have.

    #10     Jun 2, 2005