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Strategies & Market Trends : Systems, Strategies and Resources for Trading Futures -- Ignore unavailable to you. Want to Upgrade?

To: Brian Hornby who wrote (13575)	1/26/1999 8:39:00 AM
From: Tom Trader	Read Replies (2) \| Respond to of 44573

Brian, I think that trading the gaps with relatively tight stops could work out well--and not just in relation to the spoo One thing that you will notice is that when the gap is going to be filled in relatively short order, the turn in prices in relation to the direction of the gap, commences very soon after the open. Basically there is no momentum to sustain prices in the direction of the gap open. The bonds were a good example yesterday of this happening. But ultimately it is a question of knowing when to admit that one is wrong and move on -- and if one cannot do that it is best not to play the gap. I like trading the gap when the direction of the gap is against the prevailing trend--ie trend is up and the gap open is down in relation to the previous close, etc. In limited circumstances I go the other way but then I need a logical place to use a stop that is not likely to be hit too easily. For example, today though I am on a sell signal -- which to me suggests a trend that is down -- the gap that we may have today can be bought and I intend doing so provided that I can get in at 1236-37. I'll try and post if I actually do the trade--much depends on whether I am able to monitor the trade until I close it out -- and I am not sure whether I'll be able to do that today because of other commitments.