How to Master and Trade the Gap
06/20/2008 12:00 am EST
Andrews told traders that gaps are defined by the prior day's open, high, and close. He noted that more than 72% of all gaps in the S&P 500 futures have been filled in the last 10 years, adding that profits are much more probable if you develop predetermined targets.
Additionally, Andrews gave traders some specific advice regarding the location of the trade, trading zones, optimizing targets, and holding periods.
On the subject of stops, he advised attendees to stay away from trailing stops and to always use a stop when trading futures.
Traders looking for ideas were amply rewarded as Andrews gave some specific examples of trades and how to optimize their targets for each zone.
Lastly, he strongly recommended both back- and forward-testing to hone your trading strategy.