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Strategies & Market Trends : Systems, Strategies and Resources for Trading Futures

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To: SE who wrote (7379)	10/28/1998 10:23:00 AM
From: Patrick Slevin	Read Replies (1) of 44573

I don't disagree that the concept of fading gap opens generally works. I'm just saying for a day trader one would not normally hold the short as it was going against one nor would a day trader usually sell into strength; usually the posture would be to stand aside until the train started running out of steam. Even Williams got beat up 3 times before making a sizable profit on the downside. I don't know a lot of people who would have taken that tack. Usually, people stop banging their head against a wall when they realize how much better it feels once they stop. Picking the top was the key. Williams finally did; he sold 93.50 and covered at 80.00; after 3 misses at it however. So if one were to attempt to fade the gap as a rule where would the trader have a money management stop? In this case it would have to have been greater than 5.50 points. Suppose it was a true breakaway gap? One of those could decimate winnings from several successful plays. Again, I'm not saying the concept isn't sound nor is it obscure. Many traders fade gap Opens; it's just timing the point where it's sold is the knotty part.

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