happy girl
Any suggestions/strategies ?
I received this as a subscriber to the Rightline Split report last year. This strategy sometimes work but not always.
What ever you do Do NOT make a market order at the open. Be patient.
A GAP OPEN TRADING STRATEGY
Like any system, method, tactic or strategy, its not 100% reliable, but
it significantly reduces the risk of playing gap opens. Recall that a
gap open is when the opening price is above the previous evening's
closing price.
A Gap Open Tactic:
In general, a stock will gap open to the upside on a split announcement,
news, positive earnings, a brokerage upgrade, or a strong move in the
stock's sector.
Ideally, the stock should gap above the previous day's high.
Ideally the stock should be a relatively strong issue that is in an up
trend and/or rebounding off significant price support, a major moving
average (like the 50MA or the 200MA), or a well defined trendline.
Preferably, the company should be in a very strong group.
Once the stock has gapped open to the upside in the morning and has
traded for a complete half-hour, the entry point at which to buy will be
1/4 above the high of the 1st half-hour. In other words, the stock can
only be bought after it has traded for a complete half-hour, and then
only if it manages to trade 1/4 point above the highest price of the
first half-hour. (NOTE: For aggressive traders, you can adapt this to
the first fifteen minutes. Realize that you add more risk to the trade
by shortening the evaluation time period. Conversely, traders who are
less risk prone should use 45 minutes to one hour.)
The ideal situation occurs when the break above the 1st half-hour's high
happens several hours after the 1st half-hour of trading (mid to latter
day).
Also, should the "gap open" take the issue from below to above a
significant moving average like the 50MA or 200MA,consider it a very
bullish sign and therefore an extremely compelling play.
We all know that no strategy can ever be 100%, but the above guidelines
have helped us capitalize on strong stocks that would have been missed
due to them opening the day for trading significantly higher than their
previous day's close.
Good luck
3d |
