question on buying a GAP UP

Discussion in 'Trading' started by Warrior4g, Jan 29, 2008.

  1. if company XYZ reports bowout earnings and many of you buy the opening gap up in a stock? what are some of your strategies regarding such a scenario?
  3. Dustin


    I suggest trying to bid for 1/4 to 1/2 position about 5 mins prior to open, then adding to the position on new highs at the open. That way you have a better average and can hold through any little swings. That would get you in stuff like ZMH and FTO today for a nice ride.

    I don't currently trade this but had some success with it last year.
  4. balda


    wouldn't 84% success rate apply to wrong indicators or no indicators as well?
  5. I guess the indicators you use determines whether or not a gap up closes or keep on running :D
  6. There are 3 basic "gap plays".... gap-n-go, gap-n-crap, and gap-fill-resume... a couple variations of each.

    Sometimes you can make a better guess as to which it likely is. The rest of the time you need to figure it out as it develops.

    I find "indicators" to be of little value.
  7. "I find "indicators" to be of little value."

    So did I till I found the right ones.:D
  8. I don't like to go long a gap up on an earnings stock, but I do like stocks that gap above the previous days highs and find support there.

    You may be better off trading a stock in the same sector and using the earnings stock as a leader (if earnings stock is up 5%, and related stock is flat to up 1%, buy the related stock, especially if the related stock has not yet reported).
  9. balda


    actually when stock 1) gaps up 2) forms a base and than 3) breaks out from the base (basic plan to print money).
  10. I agree. remember "buy on rumor, sell on news."

    However we don't trade stocks on earnings day, way too risky. "Blow out earnings" - stock down 3 %, etc. Happens all the time.


    #10     Jan 29, 2008