Rigel, thanks for the detail. Other than fading the open what other common strategies have been used successfully by traders here? I read once that someone watched for stocks moving up strongly in the last 10 minutes of the session. The trader bought in the last couple of minutes and then placed an order to sell "at the open" assuming the market makers or specialists would gap the stock up at the open. This sounded interesting but I'm nervous about holding overnight in this market. Anyone reading this post used this strategy? Thanks ~EC
Tradewinds, I reviewed your post concerning Common Gap and Breakaway Gap..it was a good post...However, I am not up to speed with you as regards "look to the left...and you see no or price history to the left of the gap". I think you are using at least a two day chart and are looking to the left meaning the previous days price history and using that information to go by. So your saying if you see some price history its a possible fade and if you see no price history its most likely a bad fade candidate. Does this sound correct? Your looking at the "left" meaning previous day? Sorry if I am a little thick on this.
vinigar, You're exactly correct. By price history, I'm looking roughly at the last 2 hours or so from the previous trading day
Rigel, Who is your broker? Sounds like you need to switch to IB. Especially if you're only trading 1-200 shares. It takes me 2 seconds to get out of a trade. That includes symbol entry, share size, market or limit order, and execution confirmation! It's all automatic depending how you set it up. When I want out I click on the bid and hit my execution hot key and that's it! Unless you're trading really thin issues you would never have a 1/2 point slippage even with a market order. I wouldn't be able to live with that kind of execution you described. I had to deal with that when I was with Datek. "Homie don't play that game anymore". Lol. Just a suggestion.
"I read once that someone watched for stocks moving up strongly in the last 10 minutes of the session. The trader bought in the last couple of minutes and then placed an order to sell "at the open" assuming the market makers or specialists would gap the stock up at the open. This sounded interesting but I'm nervous about holding overnight in this market. Anyone reading this post used this strategy? " This technique has been around for some time. There is in fact a site devoted to it at http://www.nite-trading.com Does it work?. Indeed it does. Is it risky? You bet. If you hold positions overnight, this can be a dangerous game in any market. Imagine holding long positions overnight on Sept 10, or holding short positions on the night that a company decides to make a positive earnings forecast.
TradeWinds, Would you mind a little more elaboration on the "price history to the left" concept? Specifically, what would constitute a gap with price history vs. a gap without price history. Are you saying that a stock that chopped around at $25 a share for the last two hours of a trading day, then gapped up to $29 the next am would have no price history since it never traded near the gap price? Or are you saying something different altogether. Like Vinigiar, I am a little confused on this one. Thanks.
Here's an example of a common gap with price history to the left of the gap: http://www.tradewindsonline.net/charts/RFMDcommongap.gif Here's a breakaway gap with no price history: http://www.tradewindsonline.net/charts/SEBLbreakawaydown.gif Hope this helps, Chris
Tradewinds, Thanks for your patience and the last post...its clear for all to see now...good post bud
TradeWinds, Thanks for the charts but now I remain the sole idiot who is still trying to interpret your posts. On both of your charts, I am pretending I have only the first bar to work with on the 2nd (gap) day. So as the first bar is forming, I have no price history to the left on either chart in terms of price history at the gap price and consequently have no idea (based on the chart alone) whether or not the gap will try to fill or breakaway do I? Are you saying that since the RFMD chart had a clean higher highs/lows pattern into the close before the gap day while the SEBL was chopping that this constitutes price history? If not, what specifically would make you OK with fading/shorting the RFMD gap up chart but wary of fading/buying the SEBL gap down chart? Again sorry to be a pain but I play gaps a lot and am always interested in others interpretation methods, plays, etc.
Tradewinds, There could be "no price history" only when a stock is halted (or not trading). When a stock is trading - there's price history. Probably by "no price history" you intended to say "no price history at this price level"? Fohat