Commodity trading gets a bad rap due to the risk involved in the futures and options markets. But th...
Video: Trading Gaps on Index Futures
03/28/2012 10:45 am EST
By evaluating the size of each open gap, traders can determine whether to go long or short, and can find a valid profit target, explains Hubert Senters in this video tutorial on trading gaps on index futures.
When the index futures gap up or down, there is always a potential profit opportunity. You can increase the odds in your favor if you understand which way to go with the trade.
As with any trade, you have three choices: 1) Go long; 2) Go short; or 3) Pass on the trade.
Here is the best way to trade the gaps. If the gap on the Dow E-minis is less than 60-70 points, then you are better off shorting that move with targets at half a gap fill and one full gap fill.
If the gap on the Dow E-minis is more than 60-70 points, then you are better off going long that gap up and riding it higher.
As always, there are no guarantees in life or in trading, so make sure you use a stop.
Here is a video that explains this in detail:
By Hubert Senters of TradeTheMarkets.com
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