maxbasily
57 posts
msg #55112
- Ignore maxbasily |
9/24/2007 12:56:59 PM
interesting...noone has anything to say about this here...only talk about 80% gap fill statistics, hey but whereīs the stop? what about risk/reward??
whereīs the gain is you "fill" gaps e.g. :
avrg gain (+ 1 $) x 8 times , avrg loss(- 8$loss) x2 times..?? thatīs net -8$...and it can be worse on extreme bullish/bearish days
I donīt get it.
It can only work with stops. so where. ?my idea is using some kind of ATR. .
letīs exchange opinions here!
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TheRumpledOne
6,411 posts
msg #55126
- Ignore TheRumpledOne |
9/24/2007 5:22:27 PM
The stop is right below the open price on longs.
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maxbasily
57 posts
msg #55127
- Ignore maxbasily |
9/24/2007 5:56:10 PM
rumpled - are you kidding??
how many out of 100 plays do you get where the open is the EXACT low/high for the day..?
maybe 1-2...and 98+ times you get stopped out?..
hard to believe.
but hey - I welcome any "explanation"
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nikoschopen
2,824 posts
msg #55131
- Ignore nikoschopen |
9/24/2007 6:07:19 PM
Max, the probability for intraday gaps to get filled is pretty high. That's what most of the traders bank on when they play the gaps. Now, in case the gap should not be filled as expected, which also happens quite frequently, you would know that a tick or two above the gap opening is a safe place to set stops. Why? One reason is that when a stock zooms past its opening gap, up or down, it portends a very strong bias in that direction.
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maxbasily
57 posts
msg #55132
- Ignore maxbasily |
9/24/2007 6:21:43 PM
yeah niko, sometimes ītis so..but very often the market opens, heads higher into 10a.m.,and then settles down when the market depth calms down in the sp futures pits..
so - anyone who shorted/longed the immediate FIRST gap-price gets stopped out (according to your stop).
and then MISSES the gap fill (or at least half of it)between 9.50 - 10.50a.m.
isnīt it so.??
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nikoschopen
2,824 posts
msg #55137
- Ignore nikoschopen |
9/24/2007 7:41:43 PM
First, know that stops are used to get you out before incurring larger than life losses. Second, what stops you from flipping the trade once the trend does in fact reverse? Suppose the stock opens up and continues higher and triggers my stop in the process. However unfortunate it may have been to be stopped out prematurely (had I only known at the time!), the loss is fairly small. If the stock then reverses, as you claim, what stops me from reentering the same trade and ride it down? I will only incur one additional commission fee. No big frigging deal, or is it?!
BTW, I personally trade the eMini futures and gaps tend to get filled quite fast as witnessed in the ES this morning.
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maxbasily
57 posts
msg #55141
- Ignore maxbasily |
9/24/2007 8:09:31 PM
there we are - right at the pinnacle of the problem you guys donīt seem to "have" :
1st stop triggered e.g -2points
re-enter: again stop triggered e.g. -2 points
re-enter: again stop triggered e.g. - 2 points
etc etc..
now thatīs not a hugely sophisticated method : just re-entering 5times in a huge day against you and watching 5 x (-2p) = -10 points for the day go down the drain...
combine "these days" with "great fill" days...and Iīm sure you eek out a small gain one month, small loss another month, and hope "all is well" at the end of the year...
can we do better?? can we manage stops/gaps better???
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TheRumpledOne
6,411 posts
msg #55143
- Ignore TheRumpledOne |
9/24/2007 8:17:36 PM
MAX:
Read Wallman/Muddy's WAIT FOR GREEN thread to learn how to trade.
If I was fading the gap on AAPL, and it reversed on me, I would not wait for a $1 ( 1 point) move against me to bailreverse ( unless I am breaking rules ).
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maxbasily
57 posts
msg #55146
- Ignore maxbasily |
9/24/2007 8:26:15 PM
thx for the hint., rumpled.
nonetheless...take a look at all your"high gap fill probability" stocks the last few days...aapl. goog, rimm etc....man, not too many fills, only run-aways.
the point is, I īm a "BUY pullback in a solid trend trader"; I have however traded ES gaps - kinda less profit than with my trend strategies.
but I do believe in the "logic" and herd following success of gap fillers..
I appreciate your assistance in my education as a "gapper"..))
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TheRumpledOne
6,411 posts
msg #55150
- Ignore TheRumpledOne
modified |
9/24/2007 8:36:57 PM
"Runaway gaps" are part of the game.
AAPL and a bunch of others ran away today.
To trade profitably, one must recognize WHAT IS HAPPENING rather than WHAT IS SUPPOSE TO HAPPEN.
A gap up usually means the price will drop to fill the gap but NOT ALWAYS!
And the beauty is you don't need any indicator to tell you ... all you have to do is look at the price!!
Notice the GAP FILL STATISTICS are NOT 100%!! That means sometimes the gap does not fill. That's when your skill as a trader needs to kick in.. accurately assessing price movement.
It's really not that difficult. If the price is NOT filling the gap, then don't fade the gap!
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