Today marked yet another opening gap that filled in the major US Stock Market Indexes. Gaps are one of my favorite opening patterns to play because they can provide a dual edge for traders. By ‘dual edge’ I mean they can provide a higher % win rate and also generate more profits when correct than…
Rob Hanna at Quantifiable Edges conducted a study dedicated to mid-size index gaps that I wanted to share. Rob defined a mid-sized gap as 0.25% to 0.75% in the SPY (S&P 500 ETF), and tested the results going back to 1993. Of the 3,626 trading days, Rob found 613 “mid-sized gaps” to the upside which…
Knowing how the market (or a stock) opens in relation to yesterday’s trading can give you a clue about what’s likely to happen for today’s trading. What are the three types of openings and what might they mean? 1. No Change This is the most typical opening, where today’s open is either equal or very…