Thursday, March 01, 2007

NASDAQ: Buying the Gap Down

The only trade I saw today as far as day trading is concerned, was to buy the gap down a few minutes after the open. This is usually a good trade and it worked well today. Many times when markets gap there is a tendency for the market to attempt to return to unchanged. This doesn't always work that's why after 10:30 to 11:00 if you're losing money you need to quickly exit the trade. This is exactly what happened on Tuesday when we had the big gap down. The market attempted to move higher but then rolled over. Today was a different story. The trade worked well right from the start and never looked back. This is a good method to keep in your arsenal of short term trades especially when you develop a feel for when it's working and when it's not.


Sandro said...

So based on the last 2 cases it's something like 50/50 chance?

Kevin said...

The odds are slightly better than that...More like 60% of the time it works. When it doesn't work you lose small. When it does work, you make big...Do the math...Is it worth trading?


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