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A couple of thoughts from one who also finds gaps difficult to trade. If
there is strong resistance above a gap down then sell the retracement to the
high of the first 5 minute bar with a stop above previous day close - see
spoo chart I posted yesterday for good example of resistance above the gap -
this was a very good short trade yesterday. If there is strong support below
a gap than stand aside e.g. this morning I had confluence of support in
1255-53 areas so I did not sell the gap. The proper trade was to have sold
confluence of resistance in 1264 area yesterday with a 3-5 handle stop and
carry overnight ... as I indicated yesterday, I was leery of that trade and
did not take it ... once I've failed to enter a trade where I should, I will
not chase the trade. There was a tradable setup on 5 min chart by entering
short on the break of the first half hour low (125225) with a stop at the
half hour highs (125550) ... advantage here is entry under the confluence of
support.
Earl
----- Original Message -----
From: "Prosper" <brente@xxxxxxxxxxxx>
To: "Real Traders" <realtraders@xxxxxxxxxxxxxxx>
Sent: Tuesday, June 12, 2001 7:57 AM
Subject: [RT] Gaps! How do you deal with them?
> Gaps seem to be one of the things that messes up my trading the most these
> days. Just when I think that I'm going to get going short the next day, it
> gaps down and then proceeds to go flat for half the day, throwing my game
> plan off for the day.
>
> I was wondering if any of you have found effective ways to deal with gaps?
> Thanks.
>
> Prosper
>
>
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