I am working on a strategy known as filling the gap. This is nothing new but I dont think many traders focus on it. If not a lot of people are doing it, then its bound to be successful. I noticed this pattern when I was trading RACK.
Stocks usually fill their short term gaps. A gap is when a stock makes a large jump either up or down and leaves what looks like a gap in the chart. Sometimes this happens because of news, and sometimes it happens for no reason at all.
Now there are some rules that go along with this. Not every gap gets filled. 1) Never trade this strategy on a big gap down. I would consider a big gap anything over 20%. These usually occurs because of a news release. Keep your eye on that news. 2) Sell once the gap is filled. Our strategy is to fill the gap, if you want to hang on to the stock after the fact, you will need another strategy/reason.
Get notified next time I post. Three ways to subscribe:
Home
Ideas
Tech
Money
Marketing
Other
