GAP TRADING SIGNALS AND SYSTEM (GAP TSS)
The Trend Indicators and Trailing stop are included in the GAP TSS
For further information please read the Trend indicators and Trailing Stop Users Guide
Gaps appear regularly on Stocks, so the (GAP TSS) is an incredibly useful system for trading Stocks and Stock options.
Defining and naming gaps varies, depending on which technical manual is used as a reference.
The names used most frequently to describe gaps are: Common, Inside, Outside, Breakaway, Runaway, Continuation , Exhaustion, Falling Window, Rising Window, e.t.c.
These different types of gap only really become obvious once the stocks continues to move up or down in a discernible fashion.
Whilst useful in longer term analysis these definitions, other than to say an inside gap is more likely to fill on the same day than an outside gap, are of limited use for trading.
To simplify, the GAP TSS uses :
Gap up —- when Gap Open > previous day’s Close
Runaway Gap up —- when Gap Open >previous day’s High and remains above previous day’s High
Gap down —- when Gap Open < previous day’s Close
Runaway Gap down —- when Gap Open < previous day’s Low and remains below previous day’s Low
The GAP TRADING SIGNALS AND SYSTEM (GAP TSS)
Provides 8 individual signals to cover multiple Gap trading scenarios, as shown on the chart below
Two of these eight signals are briefly described in the 2 charts below
1) shows a runaway gap down (red zone) This gap is filled 8 days later and the pink, inverted, filled, triangle sell signal appears on the chart.
2) shows several runaway gaps up which do not fill and the green, filled, triangle runaway up buy signal appears on the chart shortly thereafter.
The 2 screenshots below show the trades and summary produced by applying the GAP TSS and utilising the gap up fill buy signal for entry.
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