SAFeTRADE
644 posts
msg #83542
- Ignore SAFeTRADE
modified |
11/27/2009 1:33:05 PM
Using MTC
Trying to understand your fade the gap as the first trade of the day. Based on the statistics from the above
filter BIDU gapped up 58 times in the last 100 days and it still managed to make 50 cents 98 times
out of the last 100 days. When you say fade the gap, do you mean wait for the price to cross below
the buy zone by 10 cents. Not fade the gap immediately after the open. With statistics like BIDU why
not just buy the open + 10 cents and then wait for the price to cross below the open minus 10 cents?
Am I missing something? Base on end of day numbers you would not know what happened first, 50
cents above open or 50 cents below open.
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four
5,087 posts
msg #83543
- Ignore four
modified |
11/27/2009 2:07:24 PM
Hope this is correct...
Fade the gap means:
A. Open today is ABOVE close yesterday
ACTION: [SHORT] at open and do not go long until the gap is closed
B. Open today is BELOW close yesterday
ACTION: [LONG] at open and do not go short until the gap is closed
* Gaps do not have to occur nor do they always close.
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Kevin_in_GA
4,599 posts
msg #83544
- Ignore Kevin_in_GA |
11/27/2009 2:34:13 PM
This is correct, but with some caveats:
1. Do not try to fade gaps that are below s2 or above r2 (BIG gaps up or down). These will generally be unprofitable trades. TRO does not explicitly state this, but others here have pointed this out, and it makes sense.
2. TRO's system requires you to wait until the price has moved through the BUY ZONE (+/- $0.10 from the open price). That means that you do not enter into a fade until the price goes $0.10 above the open price for gaps down, or $0.10 below the open for gaps up.
You might also want to look at www.masterthegap.com - lots of interesting data there on gap trading.
Kevin
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TheRumpledOne
6,411 posts
msg #83545
- Ignore TheRumpledOne |
11/27/2009 3:00:09 PM
tmanbone
TRO,
Thanks for the book recommendation; caught your post at Kreslik a few days earlier. I'm curious if you put an average on your reading time, where would you estimate it to be, 24/7 minus sleep?
=================================================
I read in binges... I'll read for a couple of months then no reading for a while.
Thirst for knowledge. I have been reading books about how the brain works. It is no wonder 95% of traders lose. Our brains works against us.
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SAFeTRADE
644 posts
msg #83546
- Ignore SAFeTRADE |
11/27/2009 3:23:04 PM
So when we say Fade the Gap as it relates to MTC stocks it means:
If the stock gaps up at the open we wait for a short at the open minus 10 cents
and
If the stock gaps down at the open we wait for a long at the open plus 10 cents.
Because the stock can continue in an upward move in a gap up
and
because the stock can continue in a downward move in a gap down.
Thanks Kevin.
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Kevin_in_GA
4,599 posts
msg #83547
- Ignore Kevin_in_GA
modified |
11/27/2009 3:56:44 PM
Don't thank me - it's TRO's system.
Just remember to be careful on BIG gaps, where the open is beyond the R2 or S2 levels.
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stratiG
147 posts
msg #83557
- Ignore stratiG |
11/28/2009 10:06:39 AM
SAFeTRADE,
The 100 day Fade the Gap statistics filter on the first page of the fade the gap forum is much better than the
one you posted. There is also a 30 day filter as well that is very good.
GS
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chetron
2,817 posts
msg #83558
- Ignore chetron |
11/28/2009 10:22:59 AM
stratiG, WHY DO YOU THINK THAT.
REMEMBER, NO FILTER IS NECESSARILY BETTER THAN ANY OTHER AS LONG AS MONEY IS BEING MADE WITH THEM.
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stratiG
147 posts
msg #83562
- Ignore stratiG |
11/28/2009 11:57:12 AM
chetron
- Ignore chetron 11/28/2009 10:22:59 AM
stratiG, WHY DO YOU THINK THAT.
REMEMBER, NO FILTER IS NECESSARILY BETTER THAN ANY OTHER AS LONG AS MONEY IS BEING MADE WITH THEM.
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You are right. I should choose my words more carefully.
SAFeTRADE
You might find the filters in the fad the gap forum useful. The filters in that forum have both statistics for gap ups and downs in the same filter. I use both the 100 day and 30 day. Have fun.
GS
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SAFeTRADE
644 posts
msg #83563
- Ignore SAFeTRADE |
11/28/2009 12:12:59 PM
It is not a trading filter. I was using it as a tool to better understand the relation between gaps
and the MTC stocks. From what I understood about fading gaps, it was done at the open,
as in immediately. I wanted to see whether a stock gapped up or down meant it would still
cross the open + 50 cent or open - 50 cent. I now under stand fades as related to MTC
stocks as being different as in waiting for the cross. Hence the example of BIDU. Even though
it gapped up at the open 50 times, it still achieved the 50 cent threshold 98 out of 100 times.
Fading that stock immediately would have killed me. I took that filter a little further and
discovered that statistically speaking the bias was even better and gave more of an edge
when a stock gapped up or down to make the +or- 50 cents. As I said earlier it is not a trading
filter so much as a different lense to see the results.
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