Trading 101: Profit From A Retest Gap

Hey traders from around the Planet. How are you doing during this present moment of time?

I’m here to break down a pretty basic subject. Not too long ago, I wrote How to profit from a gap trade ,which specifically focused on something I call the bearish gap and go trade.

In this article, I’m going to teach you how to trade the bearish retest gap. It’s really quite simple and I know you’ll enjoy it.

The information is going to be directed to those interested in day trading. Retest gaps are also great for swing trading, but you’ve got to wait a tad longer than you might wait on a day trade.

First: What do I look for? I am searching the pre-market for stocks gapping. I am looking for stocks gapping down 3-10% with an average volume of more than 1,000,000 shares.

Second: I determine if the stock appears to be opening below a daily support / demand price.

*I noticed years ago, that 90% of my trades happen after the first 30 minutes. Patience is one of the most crucial aspects of trader psychology. So I do my best to wait for the retest.

What does the retest look like?

This is where it gets fun. Feel free to use any moving average that suits you. I personally use the 10 exponential on the 5 minute time frame.

Here’s a tip. Any moving average works on any time frame for this strategy. It just doesn’t work all the time. If you lose less money than you make on this strategy, you’ll be profitable! #math

Third: After the stock has gapped down and trades bullish a few minutes look to short off of the 10 EMA on the 5 min chart. WAIT for a candlestick reversal pattern. I really like the evening star pattern, or tweezer top.

Fourth: Set up the trade, make sure your reward is greater than your risk, and place the trade. If the trade works in your favor, after 30 minutes move the stop down to mitigate risk and exit at targets.

I’ve used this strategy for years. It works 50% of the time. But if you lose less than you make, well, you are profitable.

Thanks for reading! Feel free to enjoy this video: Top 6 Best Candlestick Patterns for day trading.



Join In on this conversation, post a comment below.
Visitor - Joey M. Silva: I'm getting excited about this kind of beneficial information of your stuff in the future Take My Online Class For Me
Reply Flag
Visitor - Terry Bogard: Hi buddy, your blog' s design is simple and clean and i like it. Your blog posts about Online Dissertation Help are superb. Please keep them coming. Greets!! C Programming Project Help
Reply Flag
Visitor - Vivek: Thank you so much for sharing this amazing article. guys go 765432 and browse useless website in free of cost, this is a best website for many fun things.
Reply Flag
Visitor - Annieo Roberts: You have shared the news which very informative and well written. I do follow your blog for sharing such unique contents. A good article is a creative skill of a writer. You have addressed your thought and creativity in your article in a well organized manner. Visit best custom essay writing service to get the expert writers.
Reply Flag


Options 101: How To Profit From A Bull Put Spread

Hey, Traders from around the world! I trust you are doing sensational. What a beautiful trading season...

December 08, 2015