Thursday, August 23, 2007

Gaps - How I Trade Them Part 2

Hey everyone thinks for reading my blog. I hope everyone is having a great week.
Yesterday I talked about Gaps and why I like them and also talked about what I look for in gaps. Today I want to talk about Up Gaps and how I trade them. I will start off by saying that trading up gaps are tricky and in my experience most are filled in a short time.
I look for the same things in a stock that gaps up as one that gaps down and again I will reiterate finding out why a stock has gapped and the seriousness of the news is key to making a profitable trade. With an up gap I always like to watch it for a few days and will only get in if I continue to see a trend to the upside. The markets natural reaction to gaps seems to be a reverse over the next few days, but if a stock can hold above the gap then in my eyes we are looking at a very strong stock that will continue to new highs.
I hope that these posts help all of you in some way. If you have your own way of trading gaps I would love to hear them. The next gap I trade I will go through it with you and you can show me my flaws and maybe we can all get a little better at making money!

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