Sleepless Nights

Discussion in 'Journals' started by lundy, Jun 6, 2002.

  1. lundy


    I realize that most daytraders buy and sell within the time frame of a few minutes, what to speak of holding a trade overnight.

    I have a trade I call Sleepless Nights, because the entry is just at the close, and the exit is at the open. It's basically a way of playing the gap, literally.

    At the close I go long or short depending on whether the market will gap up or down.

    At the open, I cover my position if I'm at a profit, or I hold until it's favorable to cover if it opens at a loss.

    I realize this first post is a bit delayed since the market is closed, and the overnight futures are already moving.... but since its a sleepless night for me, I decided to post this journal. I don't have a gap signal every day, but the days I do, I will post it here.

    I shorted the close, because i expect the NDX to gap down... ie open is lower than close.

    If anyone else trades with a similar style, maybe we can compare notes/statistics. If there is enough interest sparked by this journal, I may post the setup for this play.
  2. I've dabbled with overnight gaps before, but I couldn't find any consistant relationships I thought I could exploit. I still think there's some interesting potential there. I, for one, would be interested in reading your thoughts on it.
  3. Rigel


    I think it may gap down too.
    Even though the index closed higher today ( a misLeading indicator) there were three times as many decliners as there were gainers and we're close to resistance.
  4. I also shorted the ES into the close and into 1050.00 resistance and added to the short into 1052...Big resistance up here from the Monday break down lower...

    I continue to follow the overnight markets more as the ranges have increased and since I believe alot of movement in the overnight markets can give one some very good entries on thin moves into support/resistance...
  5. lundy


    NDX closed yesterday @ 1195.6 and opened today @ 1183.91. That comes out to approximately 11 points theoretical NDX profit.

    However, since I can't actually play the NDX, I like to do a combination of NQ & QQQ options. Options are the preferred method because they're is less risk.... and I don't use stops on my gap plays.

    fyi, I only get gap plays about once or twice a week, so, I will add another play to my journal.

    I call it the Real Fibonacci and it is also based on the NDX... specifically the daily chart. The reason it's Real, is because it's exact. Most fibonacci analysis is flawed in that it doesn't work :(

    Since this fibonacci play is dependent on this bottom holding, I will update my journal with the entry near or after the market close. Naturally, the entry will be a short since it is dependent on this bottom holding... it means we get a higher high on the daily chart, and an exact fibonacci entry for a short. Stay tuned.
  6. lundy


    Electronic Daytraders Secrets features a trader named Johnathan Petak. Throughout the day, he slowly builds a position in stocks he thinks will gap. Whereas most traders might make a few hundred thousand a year, he makes that kind of money in months. He was my inspiration as a daytrader and the inspiration behind my gap play.
  7. there are a lot of overnight traders out there. Nothing wrong with it. I bought calls on the XAU yesterday afternoon and sold them this morning, made enough to cover the commissions on my other trades.
  8. lundy


    NDX closed @ 1150.78, I went long some NDX derivatives at the close.

    I only use 1/8 trading capital on these gap plays... and I try to limit my risk by using options... NQ futures is the most risky way to play the gap.

    What happens if it gaps against me? I doubledown by averaging into an NQ position when the market opens tomorrow.

    I only cover when I'm at a profit. :p

    Edit: I have found that when the market gaps against me, it always comes back to my breakeven or small profit level, then it goes about it's intended business. Thats why I double down on a loser... the losers are sometimes better than the winners!

    Also, since gaps can be big or small, I will also put on an option spread or straddle, since volatility will give the spread pofit, but, if the gap is small, I can usually get out in the morning with only a marginal loss of commissions, or possibly slippage. I use this technique because it gives a profit whether there is a gap up or down.
  9. lundy


    if it maintains this at the open, i'll be buying more (double dippin)

    edit: actually, i'll buy half now @ 1225 and the other half at the open
  10. lundy


    long more NQ @ 1112

    based on some simple fib #'s, I think the futures bottomed @ 1105.

    I'll keep buying between 1112 and 1105.

    edit: my simple fib number is 185.4 on the daily nq chart.
    #10     Jun 7, 2002