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In a message dated 98-11-14 23:59:12 EST, bnm03@xxxxxxx writes:
<< I'd say that it's better to get aboard early on the retracement. You'd be
entering a position closer to truer support. Entering at or near the
intraday high forces you to risk more. >>
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Brian (and everyone):
I believe that there are really several questions here. It is necessary to
integrate a strategy to cover all situations. When a market gaps up, it is
not enough to determine how to go long but also when and if you should go
short for those times when the gap up turns out to be the high of the day as
the market declines the rest of the day.
The problem is that the stategies to go long and to go short often overlap
each other. If the S&P starts to fill the gap (go down or retrace after the
gap up) and you go long, there is a nasty problem of where to place the stop
i.e., just below the gap or 1-10 points below the gap depending upon whether
you are an intraday scalper or a longer term trader.
If you go long and are stopped out, should you re-enter long or should you
consider going short? Does anyone have any information about how to trade in
the direction of a gap and when to go against the gap?
Lynn
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