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Master Emini S&P Gap Trading Techniques

By Lawrence  


There are all sorts of myths and wrong understandings about the Emini S&P gaps being spread everywhere in the trading world. Without careful study of the gaps, many traders choose to use simple trading strategies to capture these gaps. This brutal force approach not only wastes the information provided by the gaps, it also often entails poor risk / reward profile. Gaps actually provide very good information about the trading days to be expected. Proper use of the gaps can produce very profitable trading setups.

In this article I am going to explain the correct gap classification method and its application in discretionary and mechanical trading. Due to the need of price distribution computations, the mathematics behind is quite complex. The math part is not necessary for successful application of the concepts in trading. Hence I choose to skip over the mathematics and explain the main concepts with common sense explanations.

The gap classification method works on both stocks and index futures since they are closely related. Once you are proficient in dealing with the gaps happening in Emini S&P, the skill is equally applicable to stocks with decent liquidity.

The mechanical trading models based on each type of gaps will be published separately with the real-time signals implemented within Real-Time Trading Assistant.

For those who have not done so, please read the chapter Understanding Emini S&P Gaps first to learn the basics about gaps.

Topics Covered

  • Gap Up And Gap Down Do Not Have Directional Bias By Themselves
  • Gap Fill Or Not Is Mostly About The Distribution Of Open Positions
  • The Big Gap Decision Map
  • Expectations from 6 Types of Gaps
  • The Illusive Neutral Zone
  • After Hours Effect on Gap Behaviour
  • Discretionary Approach to Gaps
  • Mechanical Approach to Gaps


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