Rule #1
By Michael on Jul 7, 2003 in Stock Market
I’ve had this rule taped to my monitor for the past 3 years: On gap-up openings, buy above the 10:00 high. That rule has saved be a lot of money. When I started trading, I’d get all excited when I saw the futures flying pre-market. I’d rush in to buy at the open, thinking I’d get in before the market ran away from me. Almost invariably I’d buy near the high of the day. Somewhere in my reading I came across that 10:00 rule (for some it’s 10:30), and I’ve followed it ever since. (The opposite of this rule holds true for downside gaps.) The market makers and specialists often play games with the retail buyers at the open. So I think it’s always a good idea to let the opening furor die down to see what’s really going on.
Tags: Gaps, Gap_Trading, Market-Makers, Opening_Range_Breakouts, Rule_#1, Specialists, Trading_Rules
2 Comment(s)
By walter on Jul 7, 2003 | Reply
Interesting rule. Sounds like it works for you. Do you know if it works for other markets (coomidities, forex)?
By Michael on Jul 8, 2003 | Reply
Walter,
I don’t know how well that rule applies to other markets. Maybe someone else can enlighten both of us.