MORE READING MORE GAP

Today looks like a day to play a gap fade trade and John Carter, the trader who wrote the book I mentioned last week spends a lot of time on the trade.

He and his partners did some backtesting (4.5 years) on the chances of a gap filling and the results are quite interesting.

The likelihood of a gap fill is as follows:

Mondays- 65%
Tuesdays- 77%
Wednesday -79%
Thursday -82%
Friday - 78%


Those odds are excellent by any traders standard. I have not backtested the gap fill test, but if they are close to correct, one could just play the gap and spend the rest of the day on the links.

Also according to the author, the gap play is less likely to work if the premarket volume in key NAZDAQ TECH/SEMI stocks is "high" which would appear to signify a strong trend and time to stand aside from a fade. Also according to John, expiration Friday's are a day to pass on the gap play .