ASX newbie

The week has started relatively quietly . A lull before the storm ( I hope). So I will take this opportunity to add another article to follow up on yesterday’s post.

GAP TRADING is usually done over a two day’s trading duration.

I am buying in at around mid-point of the first day’s trading. And selling at around the mid-point of the second day

The “Selection Criteria” I use is:-

1.Volume. There must be good volume on the buying side. Volume is more important the day before the gap, not last week’s volume.

2.Price pattern.

3.Trend pattern. Must be a definite trendline straight upwards.

4. Multiple moving averages.

5.More buyers than sellers.

6.A reasonable spread between the “Bid” and “Ask”.

7.Price. I select the best stock with the most leverage.

To let things stabilise, I check the stock at around 50 minutes after the opening of trading prior to buying in.

A lower share price means more opportunity for a substantial price rise today and tomorrow. This increases the % profit for the trade.

A higher risk applies to these trades as well.

IF my preselected profit level % is reached quickly on the first day, I then have the option of selling today or putting in a stop loss at that level to lock in the profits and let it ride into the second day’s trading.

Very rarely am I in for three days as the share price invariably receeds in these “gaps”.

Another way that I trade is called ” Trend Trading” but that is another article for another day.