...in continuation
The Correct tick mark denotes where the gap-reverse rule comes into play. The Cross (x) demotes where it does not.
The lines above/below the opening bars denote the place where we go long/short.
Whipsaws are there...but then please tell me how to reduce them.
Wonderful idea Rakesh, its better to have a gap that is visible to us not only on 60 min. but Daily charts also. If a gap is going below/above 2-3 days range then sure it will be fully visble to us even on Dailies and these are the Gaps where bulk of traders want to get in.
I was actually thinking about 2 strategies which can be used for gaps by blending them with original Saint's strategies.
1. As for first strategy we simply use Saint's original method where we apply stoploss below 1st 5 min bar only when gap opens below our stops otherwise if Gap opens in direction of previous trend we keep the stoplosses below our last Pivot only.
This is the simplest one and proved to be effective when we were using it back few months but only problem was when we already had put 2-4 adds already on our original positions and we had to leave a lot of money on table
2. Now second one is a variable strategy with original idea from Rakeshluthra430.
What we can do here is that we use the above mentioned Gap strategy by Saint till we have 1 original position + 1adds, as we can comfortably risk some of profits to get the meat of trend but once we have already put 2 or more adds we should be alert to protect our profits because after running into trend for many days the Gaps usually signify "reversal".
For this Second Gap strategy we can keep a moving filter like we use in Min- flow.
Just an imaginary situation,Suppose we are holding 4 lots long, our SAR at 3000,
now markets open Gap up 3120 and the low of 1st 5 min. bar is 3100,
we put a stop below 3100 - 20,
next bar low 3150, our stops at 3150 -20
Now the stop is hit and I will short 1 lot now.
Now we dont SOH waiting for PL to add to our shorts, we will actually now have a moving filter above the highs of bars where we will actually go long with original 4 lots that we were carrying and put a stoploss below the latest Pivot low that we have got.
Plus we can add to our positions if the Pivot hi was crossed.
But the important thing here is we only use the Second strategy when we have had minimum of 2 ADDS + 1 Original position.The added advantage is that we are not leaving big profits on table and also have the benefit of getting back to our original positions if proved wrong
Will try to explain with charts. Views of the members are most welcome. We need to kill this Monster of Monsterous gaps once and forever
