Gap downs

[andrew_c2o]

Has anyone been caught in one of these and lost a bit? Are there any warning signs we can look for to reduce the risk of being caught in one of these? They look pretty scary!

 

[tech/a]

Yes they are nasty.

Gaps Down occur normally from news--bad news.

Its not uncommon for there to be an over reaction.

If the Gap closes within 3 days then chances are that it was/is an over reaction.
Common price action is a reversal back into the gap of around 50% retracement----- then price continuing down.
So when caught then it may pay not to panick.

 

[It's Snake Pliskin]

Has anyone been caught in one of these and lost a bit? Are there any warning signs we can look for to reduce the risk of being caught in one of these? They look pretty scary!

Hi,

I think some people call this slippage.
I've been caught in this before and had no control over it. Watch the news that adversely affects a particular stock.

I found the following site that gives trading gap strategies for going long or short.
http://www.stockcharts.com/education/TradingStrategies/gapStrategies1.html

Tell me what you think of it.

Snake Pliskin

 

[andrew_c2o]

I'm reading a book by Guppy at the moment that talks about strategies for gaps and watching the news. How well it worked I don't know but it seems to have worked for Guppy.

 

[It's Snake Pliskin]

I'm reading a book by Guppy at the moment that talks about strategies for gaps and watching the news. How well it worked I don't know but it seems to have worked for Guppy.

Which book is that? Chart trading?