Jump to content

Closing the Gap

Recommended Posts

Hi folks, apologies if I've missed any etequette. I'm new in here, and fairly new to trading.

I'm after some advice

I was going well. I managed to increase the trading capital by about 50% in 6 weeks, by using a Trading the Gap strategy (plus 1 or 2 major economic announcements such as an interest rate or election result). Basically, the strategy went, that I'd wait for the opening bell on the NYSE and then simply trade, on a 5 minute chart in the direction to close the gap, provided that the gap was within 50 points. I started with a small amount and gradually pushed until I was closing the gap with as much as 35 contracts per pip sometimes. I looked to be in and out of the trade within 10 minutes.

It seemed to work most of the time and when the trade went South, I'd pull the plug quickly.

Then, it just seemed to stop working, and in the last 10 weeks, Ive been on a continuous loosing streak and have been dying with death by 1,000 cuts. I'm still 22% up on my initial deposit.

I decided to backtest the strategy over the last 2 months on the Dow (Dec and Jan) and the gap closed very few times and where it did close, a 1:1 stop would have been taken out first. I've stopped with that strategy for now, since it doesn't seem to be working but would love someone who has experience of trading a Gap strategy to give me some suggestions of what might have changed.

Like I said,I'm fairly inexperienced.

  • Like 2
Link to comment
12 minutes ago, Spandy said:

Hi folks, apologies if I've missed any etequette. I'm new in here, and fairly new to trading.

I'm after some advice

hello and welcome to the forum, we do have some gapper traders but they seem to have gone quiet the last couple of weeks, wonder if they have run into the same wall.

  • Like 1
  • Thanks 1
Link to comment

I don't understand the rationale of this system, myself.  There's no inherent reason why a gap should take 10 minutes to be filled.  Sometimes gaps take weeks or months to get filled.  Doesn't make sense to me.

If you're 'in and out' of a trade in the space of ten minutes you're just asking for trouble, AFAIC.

Edited by dmedin
Link to comment
Guest Macntosh

I would also look at the stochastic and RSI for the relevant time periods.  I gap fill but trade when stochastic below 20% and RSI is below 30. I trade on 5 minute chart but am not greedy and trade on the basis that the gap will not be filled, so set my limit order some distance from the top. I also follow trends on 2 hour 4 hour and daily charts. I get a high percentage being profitable but previously, when I was too greedy It was much lower. I tend to trade at 0.5% profit per day and once I have closed the trade, I finish for the day, as previously, I used to over trade.

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • image.png

  • Posts

    • Yes I agree Guru, giving current examples is a good way of doing it! I have been trading for over 20 years and in the last 11 years I found myself mainly trading DAX (Germany) 40, because it is the easiest and most profitable. Which market do you find easiest to trade, Guru? Does anybody else find DAX easier to trade than other markets?  I am interested in hearing other traders' experiences.
    • Source: Coingecko  Source link: https://www.coingecko.com/research/publications/2024-q1-crypto-report The cryptocurrency sector has experienced significant growth in 2024, driven by events like Lugano city's acceptance of crypto payments and the approval of the Bitcoin spot ETF. The industry's market cap reached a record high of $2.9 trillion, with $1.1 trillion added in Q1 alone. Bitcoin surged to a new peak of $73k, surpassing its previous ATH of $68k. Top centralized exchanges like Binance, Bitget, OKX, and Bybit saw substantial growth, with Bitget particularly excelling in derivative trading. Bitget's open interest exceeded OKX's and ranked closely behind Binance and Bybit. Spot trading volume surged from $29B in January to $95B in March, elevating Bitget to the top 7 spot in the spot market and maintaining the 4th position in the derivative market among major centralized exchanges. While other exchanges also witnessed significant growth, Bitget's standout performance has made it the focal point of industry attention. What are your impressions of these findings?
    • DogeDay always brings back memories of 2019 when my friends were diving into Dogecoin and joining farming activities. That's why I'm excited to explore the Bitget DogeDay giveaway event. Plus, with tomorrow's BTC halving, the excitement is doubled!
  • Create New...