LastShadow's Position Trading Message Board

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Strategies & Market Trends : LastShadow's Position Trading

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To: LastShadow who wrote (7228)	1/26/1999 7:43:00 PM
From: eik	Read Replies (1) of 43080

Gaps: detection and entry points... I believe this board is the right place to respond to the private messages and emails I've received. The purpose of any Gap Strategy is: 1. To detect the moment when the yesterday's intraday chart pattern is broken. 2. To calculate the entry points for 2 possible cases: - pattern will be restored (gap will be filled); - stock will start building a new pattern. All Gap methods are very simple. They replace yesterday's chart with a few characteristic points that supposed to represent the pattern. Classic Full Gap. Two points - yesterday's high and low considered as support and resistance levels for today's open. Quick Gap Entries (Jay's triggers). One point - yesterday's close. Actually it means that we consider the close price as support and resistance for today's open, and any deviation should be treated as a gap. When I realized that fact I started calculating Jay's triggers with my calculator by putting: support1 = resistance1 = close. The method I use. Three points - yesterday's low, high, close and one index of the shape - asymmetry (optional). I use this data for "dirty" estimates of support/resistance levels. That's one of the modifications of Pivot Point method, which I improved for using the asymmetry option. The chart has "up" asymmetry if the stock's price spent the most time between it's day's average value and day's high (closer to the high level). It can have "down" asymmetry or no asymmetry as well. (If there is any mathematician reading this definitions, please don't shoot me - I know what I'm talking about but trying to use the common language). The more detailed analysis shows the analogy between this type of rough estimates and the Bollinger Band approach. In full version of calculator you can use any other (more intellectual) estimates of supports and resistances with manual input. The Full and Quick Entries are calculated. I didn't find big differences between the methods for problem # 2. The same approach (many times discussed on this thread) but slightly different formulas and often different input data as the result of #1. You can find the daily examples at geocities.com Thanks.

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