Trading Gaps

Market indices often gap up or down in the morning, creating good trading opportunities.

You can choose to follow the gap direction or fade the gap.

When the gap is up, you go long. On the other hand, you can also be the fader. If the gap is up, look for the right condition to short it down to close gap.

Market has been really good for fading the gap because the market had been basically range bound, and it works really well with indices.

So, just to show you visually how you can make use of our seasons color (right condition ) to fade the gap.

Slide1.JPG

A50 gap up on open, season = Hot. Around 9:15am - an autumn hammer formed @ support level, this is an indication to traders that you have no chance to short yet, follow the direction, go for a "long" trade.

It traded all the way up to resistance level, at this point, you have to focus on whether this resistance level is strong enough to resist this up move if you still thinking of fading the gap. Look out for "Confirmation".

Combining season color (Autumn in this case) and candlestick confirmation for short opportunities. It starts to show autumn shooting star at 9:35am, take that signal to go for short, by 9:48am, the gap was closed!

Taiwan also gap up today. Let's take a look at Taiwan.

Slide2.JPG

Same as A50, Taiwan gap up with a "hot season", supported at TY-map with an IB buy signal. It traded up to resistance level and start to show autumn sell signals. The first short signal was not successful, but immediately, the second autumn short signal at 9:11am triggered. The gap was closed at 11:18am.

RISK DISCLOSURE STATEMENT:


THE RISK OF LOSS IN TRADING CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER SIGNIFICANT ASPECTS OF THE FUTURES MARKETS. YOU SHOULD THEREFORE CAREFULLY STUDY FUTURES TRADING BEFORE YOU TRADE.

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