GAPS
An opening GAP occurs when today's price is either greater than yesterday's price or less than yesterday's low price.
Gap Trading rules :
Signals : There are 2 signals, first in GAP OPEN and second is DELAYED GAP OPEN.
GAP DOWN BUY SIGNAL :
1. In the event of opening price GAP DOWN, first condition for possible
buy signal will be established.
2. If a lower opening price gap occurs, then you will place an order to buy once the market has come back up and penetrated previous day's low by a certain number of ticks.
3. Such an order must be given as Buy stop order OR buy stop limit order
4. Once the order has been filled, You will use the stop loss at a pre determined amount or several ticks below the day's low.