The Gap Open Online Stock Trading Strategy
The “Gap-Open Trading Strategy” is a popular online stock trading technique that we use whenever a stock gaps open beyond our planned entry price. For example if we plan to enter a stock long at $50, but it opens the next morning higher at $52, we will then apply the Gap-Open strategy.
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Here’s how it works. Instead of entering immediately at $52, we wait until the stock has been trading for thirty minutes. We then check the highest price that the stock traded at during that time, and re-set our entry point to just above that level; usually .25 to .375 of a point is enough. Once the price is reached, we enter our trade.
It’s as simple as that. If the stock is really strong, it will first gap up at the open, dip down as some traders grab a quick profit, then turn around and move higher. By waiting until the first thirty minutes of trading is past, we avoid buying at what is often the high of the day.