GAP

 

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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

trend and trail explain

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

Gap 8 signals

 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. 

Gap runaway down  fill sell w settings

 

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.

Gap runaway up  buy signal

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.

Gap u buy strategy Gap u buy strategy summary

 

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CFTC Commission rule 4.41(b)(1)(i) hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. IMPORTANT:  The risk of loss in trading futures, options, cash currencies and other leveraged transaction products can be substantial. Therefore only “risk capital” should be used. Futures, options, cash currencies and other leveraged transaction products are not suitable investments for everyone. The valuation of futures, options, cash currencies and other leveraged transaction products may fluctuate and as a result  you may lose more than the amount originally invested and may also have to pay more later. Consider your financial condition before deciding to invest or trade.