Day trading can be a consistently profitable business if executed with discipline, strategy and without emotional biases (greed, fear)! Below I present a couple of low-risk, high risk-to-reward (>3) gap-up strategies with step-by-step instructions. These are based on my years of studies, experimentation and experience. Whilst I am sharing my knowledge hoping that you can benefit from it, I do NOT take any responsibility of any losses you may experience. You can experiment with simulators and get confidence and experience before trying out in real. These are simple strategies but require deep technical analysis knowledge to execute them properly.
These strategies will work on a 5 min chart when a stock opens with a gap-up above 2% of the previous day's closing price. It is best to use stocks with an average volume of above 300K and an ATR of more then 0.75. Apply on stocks in less than $20 price range.
I am using Volume, VWAP, 9EMA, Camarilla Pivots and McGingley Dynamic as indicators. However, I cannot stress enough the importance of deep understanding of Price/Volume action! Candle stick patterns with the combination of Price/Volume action are the most basic and
the best indicators as per my studies and experience.
For now, I have added step-by-step instructions in the images for you to follow. I'll keep updating this blog post to add more details as well as more gap-up strategies. Gap-down (>2%) strategies are the reverse of the gap-up strategies
1. RED MORNING
 |
| RED MORNING gap-up strategy |
2. GREEN2RED REVERSAL
 |
| GREEN2RED gap-up strategy |
Remember that these are for intraday and day-trading. Do not apply them on swing trading and you must close your positions before the end of the day unless you are sure that some swing trading starategy is in play for the next day. I'll write about swing trading strategies at some other point.
Have fun and good luck!
