Trading the gap at open? Who does this?

Discussion in 'Trading' started by johnstac, Aug 1, 2012.

  1. johnstac


    I found this video today. Please watch it and then tell me if this happens more often than not. What is the risk involved and am I on the right side of it by trading?
  2. Interesting post. He seems to jump right in at the open, but I think you can wait and play with the opening range. One strategy is to pull a fibonacci extension from the first 30 minute low to the first 30 minute high. It works surprisingly well on gap down or gap up stocks due to the increased volatility. I have used this approach for equities for about 6 months and so far I am liking it, but still making a few adjustments. I have recently been applying it FOREX using the New York market open.

    If you use ThinkOrSwim, then let me know. I can send you a script that has been floating around to automatically plot the fib extension.

    This blog by "Trader X" shows essentially what I described above. Just look under the "Key Posts." Here's the link:

    I know this isn't exactly what you were asking, but I think you may find it worth while.
  3. j0b0123


    For the last 2 years or so, this type of action is more common because the idiots have no fear. Any dip = always buy. The fed is giving out free money and pumping the markets by removing the risk factor.

    As a trader, it is smart to take advantage of this but just realize that its likely not a long term strategy.

    This might work going forward, but know that historically that is not common. The markets are more likely to revert back to random action on gaps vs a bias like this.