Nick Fosco May 28 2010 The Ultimate Day Trader Jacob Bernstein Chief Market Analyst Daily Sentiment Index Copyright March 2009 General Trading structure Setup Trigger FollowThrough STF ID: 730943
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Slide1
Trade School: Gap Day Trading
Nick Fosco
May 28, 2010Slide2
The Ultimate Day Trader
Jacob Bernstein:
Chief Market Analyst, Daily Sentiment Index
Copyright: March 2009Slide3
GeneralTrading structure
Setup, Trigger, Follow-Through (STF)
Emotions are underlying engine of day trades
Intra-day moves are news driven
Gaps occur as emotional response to:
Political and other Market news
Corporate earnings
Other events
Traders use gaps to identify weakness or strengthSlide4
Why Gaps Work
Two types of gaps
Opening Gap Up (short setup)
Opening Gap Down (long setup)
Work because:
Market makers & Professional trade into gaps
Go short on up gaps and long on down gaps
Success Rate:
Winning Percentage: 74.9%
Profit factor: $W/$L = 1.3
Payout Ratio: W/L = 10.45Slide5
GAP Set-upBuy Set-up
Opening price is LOWER than prior day LOW
H
H
L
L
C
OSlide6
GAP Set-upSell Set-up
Opening price is HIGHER than prior day HIGH
H
L
H
L
C
OSlide7
GAP TriggerBuy Trigger
Price retraces ABOVE than prior day LOW
H
H
L
L
C
OSlide8
GAP TriggerSell Trigger
Price retraces BELOW prior day HIGH
H
L
H
L
C
OSlide9
Follow-Through
Exit at end of Day
Can automate – Stop sell order at End of Day (EOD)
Exit following Morning
Increase profits by selling on follow-through gap (FTG)
Mix exit
Exit 50% and EOD and 50% on FTGSlide10
Fine Tuning
Gap size
The larger the gap, the larger the trading range & probability of success
Gap Volume
Lower volume mean less commitment and more likely to retrace
Gap fill speed
Fast retrace indicates higher probability of continued retracementSlide11
Let’s find some
Load up trading platform and look to from group suggested stocks.