When gap trading, you don't need any indicators. You only need to find a market that has a price gap from the previous close to today's open.
More often than not prices tend to move towards the direction of the previous close, presenting excellent trading opportunities.
Depending on where the market opens today in relation to yesterday's close, we see either a full gap or a partial gap. Scott Andrews from www. Gap Trading Probabilities courtesy of www.
All zones starting with "D" are gap trading zones after a "down day" , i. Here are the different scenarios:. Scott identifies similar zones after an "up day", i. Here are the different gap trading scenarios after an "up day":. The name of the game is not trying to catch all of the winners, but rather to avoid most of the losers. Scott Andrews believes it's because gaps opening in this zone are catching traders positioned to the long side off guard, triggering many sell stops in the process.
When looking for gaps, obviously you want to exclude the "overnight session" and only focus on the "day session" of the markets. ANY market and even stocks are suitable for gap trading. As you can see, the odds are in your favor when trading gaps, but keep in mind that past performance in not necessarily indicative of futures results.
Pick the highest probabilities. As I said before: It's not about trying to catch all of the winners, but rather to avoid most of the losers. With that in mind, give gap trading a shot. You can do it with ANY charting software, since you don't need any indicators or other fancy tools. What do YOU think about gap trading? Have you used it in your trading? What are YOUR experiences? And if you want to learn more about gap trading, then join us this Friday for a special Rockwell Trading Club Session in which "Mr.
Gap" himself Scott Andrews explains how he trades gaps. The session is free for all members. If you are not a member yet, click here to join the Rockwell Trading Club today. I do not have a Kindle and am interested in it. August 8th, at But you can read it with their free Kindle Viewer: I wasnt sure if I should leave a comment here or post to FB, so Im doing both, lol. Markus, is this 1 of your strategies u teach in your courses, or just an add on bonus?
If it is 1 of yours, I assume you would go into more detail in the course, like potential stops, etc? ALSO, you have a typo where you describe an "up day", its the same as down day in the blog In this session Scott Andrews will join us and talk in detail about the "Opening Zones" and also provide the probabilities for several futures markets.
If you're a Rockwell Trading Club Member, you'll get an invitation to this session automatically on Thursday afternoon. Markus, thanks for this interesting summary. So my take from this article is that the smaller the gap the higher the probability for it to close which is not astonishing because small price movements are more likely to occur than big ones. But thanks for supporting this thought with statistics. In this article I want to show you some ideas how to trade them.
It's All About Probabilities Depending on where the market opens today in relation to yesterday's close, we see either a full gap or a partial gap. Leave a Reply 7 comments. Kenny Kenny - August 7, Reply. Toby Ferguson - August 8, Reply. Antoine Reymond - August 8, Reply. Wane Roberts - August 10, Reply. Paul Frederick - August 11, Reply. Click to cancel reply.More...