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  • April 20, 2018

Volatile Markets Create Opportunities to Trade Gaps

October 21, 2014 by Michael Carr

Gaps are created when a stock or ETF opens significantly higher or lower than it closed the previous day. Traders have developed a variety of rules for trading gaps but few have tested their rules. Stock Gap Trading Strategies that Work and ETF Gap Trading Strategies that Work provide quantified results and back tested results for gap trading.

The former Head of Trading at Fidelity Capital Markets, Kevin Haggerty, has said, “If I could only trade one strategy, it would be early morning gaps.” Stock Gap Trading Strategies that Work and ETF Gap Trading Strategies that Work provide detailed rules on how you can trade the early morning gaps Haggerty finds so appealing.

These guidebooks include dozens of short-term set-ups which have been correct greater than 68% of the time (a very high win percentage) when applied to individual stocks. The average gain per trade (this includes all winning and losing trades) has averaged up to 6.16% per trade since 2001!

ETFs provide even stronger results. In ETF Gap Trading Strategies that Work, we provide the complete rules for trading non-leveraged and leveraged ETFs.  Some of the test results are summarized below.

2

Leveraged ETFs offer greater potential returns but have a greater degree of risk.

3

In recent weeks, market volatility has increased. When volatility is high, we often see a large number of gaps. With volatility likely to continue, gap trading could be among the best trading opportunities available in the current market.

Filed Under: Analytics, Recent Tagged With: ETF Trading, Market Briefing, stock trading

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Disclaimer: The Connors Group, Inc. ("Company") is not an investment advisory service, nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities or currencies customers should buy or sell for themselves. The analysts and employees or affiliates of Company may hold positions in the stocks, currencies or industries discussed here. You understand and acknowledge that there is a very high degree of risk involved in trading securities and/or currencies. The Company, the authors, the publisher, and all affiliates of Company assume no responsibility or liability for your trading and investment results. Factual statements on the Company's website, or in its publications, are made as of the date stated and are subject to change without notice.
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