Scalping Gappers.

Discussion in 'Strategy Development' started by DuyLe, Feb 19, 2008.

  1. DuyLe


    Hi, just wondering how you guys played stocks that gap up big or down. Do you usally fade stocks that gap up big? And what other conditions do you look at it?

  2. Correct price action. You dont just short a big gap up because its up big. You need to gauge conditions after the gap up occurs to see if the corresponding price action is in line with the correct action. Sometimes its buying dips of a gap up other times its fading the up move.

    It all comes down to experience. Inexperienced guys will certainly get lucky fading gaps blindly but they will get blindsided at some point so it pays to study PA of the gaps to see commonalities that exist for fades that work out.

  3. Brandonf

    Brandonf ET Sponsor
  4. jmoo


    Don or anyone else reading this,

    Has anyone found that buying stocks that are strong or weak around whole numbers to be a viable strategy?

    For example say GRMN gaps up 5 points and is at 74.80. Put a buy in at 75 or just below and scalp it to 75.25.

    The premise being that there are stop orders for shorts and buy stops for longs?
  5. For daytrading, we buy on .01 and .06 and offer our sells at .04 and .09 initially. Depends on the depth and breadth of the book.

  6. jmoo



    That must be a high probability trade if your scalping for .03. Do you go in with huge size? 5k shares or more? You must only trade the most liquid names
  7. I send in one layer of 2000 shares, and another layer of 1,000 shares. My program automatically sends a retracement order 6 cents (profit) for half my filled size. I taperead the market to get out of the other half. Remember, 10 cents a day on 5,000 shares is $100,000 per year, right?

    We average about a 75/25 win loss ratio with new guys, I tend to do a little bit better.

  8. ps0013


    Do you have a stop built in to avoid whipsaws?
    Do you have a waiting period on fading a gap...9:00? 9:15, 10:00 etc?
  9. look what LNN did today. thats a gap !
    #10     Mar 19, 2008