Following Tom C's entry rules from the Trader X blog on opening gap plays - produced a profitable trade. Check it out.
Here are my business rules to help capture potential profitable targets:
- 9:35AM East. Scan for opening gaps using the following parameters. I use FinViz in real time (you must subscribe to the Elite option):
- Minimum daily volume average >500k shares/day
- Current volumes 3x as normal average daily range.
- Price above $5
- Gap up +1%
- 9:55-10:00 By that time i usually have 3-4 candidates to trade.
-10:00- I will look for a clean break of the candle that will close a point above the opening range.
- Other considerations: I use 10 minutes periods for scanning ; rely on the 8 Period EMA as guide to a clean trend. Plot Fibonacci pullback/expansion between first pivot of day and previous day low. Check out this link for reference.
- Exit rules: i will usually use two rules:
- I will use the 5 period RSI to guide an exit by getting selling once the indicator crosses below 70 or if i notice a big divergence between highs.
- The low of a candle violates the last low from the previous candle that marked a high from the day.