jasont

Ok first off I have decided to move my journal here because I am tired of seeing my journal in every entry of the blog section. I don’t think it’s fair for people wanting to check out others blogs and just seeing my journal there. This way I can post my journal here and the most spaces I take up will be one as opposed to just about every spot I am taking now in the “recent blog entries” section. I also was getting a bit stale and wanted to change things up a bit. Right now I want to start off with an assessment of my trading and how it has been going. Things were doing ok until this week I made a number of bad decisions and earned myself a lesson in humility. In this game I really need to avoid thinking I have conquered it. It allowed complacency to enter my trading. So to begin with I want to outline my statistics. All of them are made on a per contract basis. I don’t want increased size and/or decreased size to alter the purity of my statistics. So here is the overall picture below for my live account. Total Trades: 155 No. of Wins: 69 No. of Losses: 73 Breakeven Trades: 13 Win %: 44.5% Av Win Amount on winning contract: $68.48 Av Loss Amount on Losing contract: $-49.66 Risk/Reward Ratio: $1 Risked to make $1.37 (1:1.37) The above picture isn’t too bad but it isn’t great. The average win amount in comparison to the average loss amount is ok, ideally I would prefer it to be in the 1.5-2.0 range but where it is I can live with. What is really irritating me at this point is the Win %. During my simulation trading and also whenever I do switch to simulation, my Win% is closer to 60%+. Now if that was the case here, the 1:1.37 Risk/Reward would be fine. Overall I am ahead about 6.2% on my starting capital. I have made 21.1% profit with my trading but commissions have cut me back to 6.2%. Prior to this week I was ahead by 15.9% but took a rather irritating setback with only 4 of 16 trades being winners. Unfortunately the winners were not great so couldn’t salvage the situation. So this is where I stand on an overall basis. If I break down the results a bit more I get a more interesting look on my trading. I don’t count the breakeven trades in my further looks as I only count winners and losers. Again the results are on a per contract basis so not to distort the bare facts. The results are as follows: Short Trades Short Wins: 29 Short Losses: 55 Win% on Short Trades: 35% Average Win Amount on winning Short Trade: $72.41 Average Loss Amount on losing Short Trade: $45.91 Risk/Reward Ratio On Short Trades: 1:1.58 ($1 Risked to Make $1.58) Long Trades Long Wins: 40 Long Losses: 18 Win% on Long Trades: 69% Average Win Amount on winning Long Trade: $65.31 Average Loss Amount on losing Short Trade: $61.11 Risk/Reward Ratio On Long Trades: 1:1.07 ($1 Risked to Make $1.07) So I am faced with a rather strange dilemma at this point. I take way too many losses on my short trades for my liking. In fact I don’t have the same problem when I trade short in my simulation account. I also seem to be preventing my long trades from running their full course however it could be more a result of being in a downward market up to this stage. I am trying to find a solution to this problem. I am in fact losing money with my short trades and making money with my long trades. Prior to this week I was close to break even with my short trades though which was a big improvement. I am unsure how I can fix it at this point but will work towards a solution. Part of finding the solution is that I may revert back to recording my trading via camera. I believe my analysis most likely changes when I trade my live account. I can’t catch that when writing in my journal as I believe I probably filter my typing. On camera I can’t change my thoughts; I will just need to push myself to talk through my trades. I have done this in the past but it sort of faded off as I switched to writing. I couldn’t do so many things at once whilst trying to monitor the market. I also need to make sure it doesn’t slow down my trading platform. I will look at ways to get it up on the net either through YouTube or something else. I will look further into it over the next couple of days and see how viable it is to do. I think I will be able to capture more through video with my trading. I want to take things a bit easier next week and refrain from over trading. Hopefully this can help.

I don't trade the USD but I do monitor it against a couple different currencies. Therefore I can't comment on it appropriately. Downrivertrader I will point out some interesting things I picked up on your post which could be food for thought. If you have just entered a short or have been in a short trade for quite some time, you might want to look at your position as unbiased as possible. I'm not saying you have done so but often people post "the market is going to do this" more out of a wanting the market to do so rather than out of unbiased analysis. The need for clarification from others is often a form of solidifying ones reasoning for entering a trade. As I said I have no idea of your circumstances but if in a trade or thinking of getting in, make sure you look at it from an objectionable viewpoint. Most traders I know don't say "we are about to see", generally its more of a "the odds favor a move". Something else I picked up on in your post is that you mention traders make things so hard. I would have to agree with you there. Although I think you are trying to fade the guys that really matter in the market. The guys that matter take advantage of those who get in on trends late. It's what they do because it is most efficient for them. The people who look at a trend that has seemingly been going on forever and cannot possibly fathom the market turning are usually the ones most likely picked off by the big guys. They deliberately play the game that way. Your point of view to me seems overly complex. Correct me if I am wrong but your idea is that we have been going down, so there will be plenty of traders who won't continue shorting the trend (usually the pros in this instance). So as they (the pros) look for the bottom, the short side is much better for a continuation because many of the people who are experienced in the markets will get caught out trying to find the bottom. So in short you would be creating a method that cancels itself out. Instead of taking advantage of those who are on the trend late, you are looking to take advantage of those who are trying to take advantage of the people in on the trend late. So in fact you would become one of the people in on the trend late. If that makes sense. Just food for thought as I think it is important we look at our trade ideas objectionably.

I can't give you much of a different picture Atto as I agree with much of your analysis. I don't follow the Nasdaq as much as I do the S&P so I'll try to add a bit. The VIX showed a crazy move yesterday that can't really be seen on a simple close line chart so I have attached the candle version. It opened at the highest I have seen and made a massive move lower. All that really does for me is show less interest in holding put options for the moment and less implied volatility. Granted I found the prior two weeks more volatile than yesterday so I'm not sure it is great for exact volatility implications. Now it's still early days at this point but following the big spikes from the VIX on the January and March lows we had a pretty big gain the next following days, roughly around 50+ points. Just because those occurred last couple of bottoms doesn't mean it will have to bounce 50+ points again but its a possibility. Now I personally have found the selling on this leg down much different to the January and March selling. Less panic has been hitting the markets from my observations on this leg down, it is almost as though we have changed from panic selling in a bull market to accepting we are selling in a bear market. Not sure if the news has contributed to this but the selling has been more steady as though it's just the thing we should be doing right now. My concerns on steady selling is that it's out of the ordinary for the market most of the time. The past few days has shown a large number of contracts change hands and it does indicate a bounce. Whether it will result in a turn of trend or simply a reasonable bounce with continued selling is anyones guess right now. I personally believe that we haven't yet seen the panic selling that accompanies a large sized move higher nor have we seen the slightest sign of fundamental optimism globally. Right now every country is hurting fundamentally. So I agree with your analysis that a bounce is coming, where it goes is not really my specialty so I'll leave that up to others, I do believe probability is on it being reasonably short lived at this stage.

Thanks for the excellent responses guys. For the moment the problem appears to be entries. I can see the market setting up well within my signals yet sometimes I just leave it too long to enter when I know I should have entered already. The strangest part is that I have a relatively low risk amount per trade. In fact I recently had a spate of 14 losers out of 18 trades yet my account drawdown was 5.5%. In my opinion that is a pretty good result. Now when I am in losing trades it doesn't appear so much to be the money factor that gets me peeved. In fact whenever I take a loss I have a feeling of "whatever" about the money side but get frustrated at myself for not identifying reasons I should have been out earlier or not been in the trade at all. Sometimes the old impulse trade hits me because a few moves earlier I missed a good trade due to hesitation. Maybe it is my impatience kicking in here. SMW the idea about entering and exiting for a day to get used to the process is a good idea. I'll have some deep thought about that one and assess the options with it. With brokerage included it would probably be cheaper to do it with the ES than stocks. Eiger thankyou for the time you took to write that excellent post. I have spent a lot of trying to figure out if it was my plan or if it was performance based. The fact that the simulation account always without fail brings a better result leads me to believe there is something in the gap between my mindset whilst trading live and simulation. You have given some great advice in finding the right psychologist to help me with my trading should I take that road. I can see where having to educate a non trading psychologist in the area of trading would become a problem. The three areas of things to outline when interviewing a psychologist to help me with my trading are fantastic and will be on the top of the list if I interview some. You bring up some great points about the changes in the psychology industry. It is extremely important that they are on track with advances in psychology and also aware of how it affects performance based activities. The best point you made was that I don't want to become dependent on the psychologist and that I need to be developing the skill to assess myself. I couldn't agree more. So does this mean that no one has actually used therapy for performance anxiety or any other part of their trading around here? I thought it may have been a popular area for people to look considering so much has been unveiled in the world of psychology in trading. Just look at the fact we have a Psychology part of the forum. It doesn't seem to be only directed toward the market Psychology either.

Thanks for the great replies guys. I agree with all of you in the regard that the best form of desensitization is more live trades. It is the best way to get used to being in and out of trades. I currently have moved to trading my long trades live and short trades simulation. The reason being that I have a 70% win rate with long trades and a 30% win rate with short trades. Weird I know but I'm using the simulation account to find out the problem. I'm not constantly losing, I am actually doing ok. I believe the problem is the emphasis I place on the trades which has a deeper association with past issues I don't seem to be able to look at objectionably. I'm not looking for someone to wave a magic wand and remove excessive emotions from trading. I'm more so looking for someone to help me understand where it's coming from and have ways to manage it over time. In all honesty if I was trading without the association to my trading account I would be doing much better. I would love to trade in a prop firm with a massive sampling rate. It would make the process develop a lot quicker without the consequences associated with ones own account. Not to mention retail commissions. Darthtrader2.0 that would be a very good function to a trading platform. I have often thought it would be good to trade the simulation account but it really trades your live account. Of course it would be a detriment to those who don't take simulation trading seriously but they would choose it anyway. I have tried switching from simulation to live and back etc however the results are always the same. I hesitate on the live trades but take the trades as I switch to simulation.

Hi Guys, I know there was a thread similar to this about a year ago but wanted to get some thoughts or peoples experiences in the area. I have heard that some big institutions use therapists as coaches at times with their fund managers, similar to what Brett Steenbarger appears to do. I personally perform better when I trade simulation as opposed to my live account. I use the same trading plan for both but it seems I am willing to take my signals more confidently in the simulation account. This type of thing is commonly known as performance anxiety, placing pressure upon oneself greater than necessary. Many may be able to remember a time when they placed a great deal of pressure on themselves be it in sports finals, school/college/university exams or even stage performances. I was hoping some people may have used therapy to help their trading in such ways and could share their experiences. I know it is a very personal area to share and understand if those who have done so would not like it to be public domain. I personally am looking into it right now as I will do whatever it takes to bridge that gap which prevents me from being more profitable in my trading. So is there anyone out there that can share their experiences with therapy that helped their trading in any form?

Illumintai reports simply tell the past, just like charts. They report what has happened and project future price from past performance. Usually when everyone says the market is going a particular direction, the market has a tendency to do the opposite. Especially when it is non traders (such as many economists) predicting so. When everyone is buying, who is left to sell? Avoid taking the easy trade, which in my opinion Oil seems to be. Making a gain in 3 months when you haven't traded before is more a gamble rather than performance based. My thoughts would be to tackle it from a deviation from the mean or average price. Put up some basic EMA's on the weakest performing sectors for the market you are trading. As you can't trade short, buy the ones that are the furthest underneath the EMA's and gamble on a return to the average or mean price.

Db this is a very interesting and valuable comment. Can I ask if you are referring to the tendency many of us had in the beginning to think that trading was easy? By that I mean new traders hear about trading and then jump in the pond without taking the proper procedures to learn? Then the true traders are distinguished by the ones that understand and take on a role of hard work and constant learning of trading whilst the others leave the market unwilling to put in the time and effort? If there is something different that I have completely missed from your comment can you please explain it further?

I am not a big fan of what most people refer to as "indicators" myself but use the EMA's and SMA's as what some people refer to as the lazy man's trend lines. Knowing how to read charts simply by price takes a long time to learn. It is probably for the best that new traders use indicators in the beginning to help them understand the way price reacts. I know I started that way and then after substantial periods of time watching, you begin to understand price alone. It eases the trader into the market and if they find that the indicators give them a good way to trade then so be it. They may as well stick with it as long as it works. Saying "too many indicators" is something that can't really be set in stone. The word indicators is subjective in itself. I believe candles, bars, ticks etc are indicators of past price so it really depends. Pretty much everything we have on our charts can be construed as an indicator including different time frames of the same market, other markets we use that are correlated as well as things such as the NYSE Tick etc. So putting a number on indicators really shouldn't be as much of a focus as is making sure you have indicators that tell the individual something. Some people have Stochastics that tell them the story of price whilst others have EMA's or MACD's or just bar charts and volume. We all see things differently so its just a matter of finding whatever works for the individual and over time they will add and remove different elements as their experience grows. I don't think it's fair to tell new traders to just use this or that because of X reason. I think its more beneficial to give them options so they can learn for themselves. Something continually slaps me in the face and that is that trading can't really be taught, it can only be learnt.

I meditate every day but use a few different ways. The most effective way I have found, which has been proven through a biofeedback device is sitting at my desk listening to a meditation song. I focus on one image in my mind and also on my breathing. Whenever I recognize that I am thinking something different I go back to that one image. Another form of meditation I use is walking my dog. Sometimes I try not to think about anything and just try to take in as much information from the surrounding environment as possible. Looking at individual leaves on trees, noticing little things, trying to keep my mind as curious as possible. Other times when I walk my dog I deliberately spend the entire time thinking about what makes my trading plan have an edge. The last form of meditation I use is Holosync. If you want to know what that is simply Google Holosync and you should get their site with all their information. I actually find it isn't a peaceful form of meditation and that it gets you thinking about things you don't want to. Usually the stuff that hurts that you deliberately buried in the back of your mind because you didn't want to think about it. It is good to clean out the cobwebs.

Thanks Firewalker, I agree that it will be interesting to see what occurs in regards to the gaps on an up trending market over a longer time frame. What is interesting though is that I have recorded how many days trended up in the morning, how many trended down and how many saw a ranging market. The criteria was a general trend from 9.30am to 12pm. Of 43 total days we saw 20 days trend up for the morning, 13 trend down and 10 range for the morning. Not quite the same as seeing an up trending market but it is interesting that we had more days where the market trended up in the morning. I haven't assessed how many of those 20 up trending and down trending mornings saw the gap closed but it looks like I will need to get those stats together.

UPDATE: After two weeks of recording the market from my initial research I have an update. The figures aren't as great as they were but they are definitely are still high probability. I now have a total 43 days I have looked at with 40 of those 43 days being gap days. 27 of those days have seen their gaps filled. That gives a 62% of gap days being filled. Thats not fantastic but a good trader could probably trade a tight stop on these and look for the runaways when the turn is sensed. Looking further into my 8 points theory we have now got 30 days of data where the gap was 8 points or below. 24 of the days where we gapped below 8 points were filled. That makes 80% of gap days below 8 points filled. That is more like the figures I am looking for. Now if we only include Wednesday, Thursday and Friday in the gap days that are below 8 points we have 19 days of data and 16 of those days were closed. That gives us a slightly better result of 84% success. It's better than the results including all days with a gap beneath 8 points but it may not be worth leaving those other days out. I decided to look into the risk reward ratios associated with each type of gap day to see if there was any major differences. If we included all gap days we have an average gain of 5.93 points when closing the gap and an initial average pullback of 0.78 points. That itself is quite good considering 62% of the gaps are closed. If we only used gap days of 8 points or less we have an average gain of 5.47 points when closing the gap and an average initial pullback of 0.80 points. That looks much better when we include the 80% success rate. If we narrowed it again to only the gap days 8 points or less on Wednesday, Thursday and Friday we have an average gain of 5.56 points with an average initial pullback of 0.80 points. That is pretty much the same as the above results. That leads me to believe leaving out Monday and Tuesday is not worthwhile in trading the opening gaps. When trading gaps below 8 points on everyday you have 30 possible trading opportunities as opposed to 19 when limited to Wednesday, Thursday and Friday. There are 30 gap days below 8 points of a total 40 gap days. This means a trade occurs on 75% of gaps. However there are only 19 gap days below 8 points on a Wed, Thurs and Fri of a total 40 gap days. This means only 47% of the gaps can be traded. The extra 4% success rate on these trades doesn't make up for the extra 30% trade opportunities, especially when the risk reward is very much the same. I'm going to take a more serious look at this by paper trading the gaps and seeing what happens. It could be very interesting to see what occurs. No Of Days Calculated: 43 No Of Gap Days: 40 No Of Days Gap Filled: 27 (Average gain 5.93 points, Average pullback 0.78) Gaps below 8 points: 30 Gaps below 8 points Closed: 24 (80%) (Average gain 5.47 points, Average pullback 0.80) Gaps below 8 points on Wed, Thurs, Fri: 19 Gaps below 8 points on Wed, Thurs, Fri Closed: 16 (84%) (Average gain 5.56 points, Average pullback 0.80)

Further on the belief of a random market, I think for a market to actually be random, it would have to be made up of random decision. I personally have no idea of 1% of reasons why someone would buy or sell where they did. However I will guarantee that most traders have a reason to do so. There choice to buy at X price is not simply like throwing a dart at a board whilst blindfolded. They have reason, that alone in my opinion removes randomness out of the market. Unpredictable yes, random I believe not.

Could the reason not be based upon predictability at all and more so the failure to manage ones emotions on the shorter time frame. I have found the less time to think about a decision generally makes the decision less logic based and more emotion based to new traders.

I couldn't agree more Eiger. I have found some similarities in other businesses and trading but overall they hold a completely different set of behavioral mentality. Where many entrepreneurs might say remain highly positive and bursting with energy, as a trader I find it better to be balanced positively and negatively with a calm state. Bootstrap, do you mind me asking if you trade daily time frames or intra day? The reason I ask is that I find it interesting to see if those who trade daily believe the market is more random shorter term and vice versa for those who trade intra day. I personally am an intra day trader and can see the patterns of the market change much easier in an intra day time frame better than a daily time frame. I have watched both and continue to watch both daily and intra daily. Is it a case of we as individuals see different things at different time frames? PS. I agree that the answer for me lies somewhere in between number 1 and number 2. Hence I haven't put in a vote.

That is indeed an interesting and useful find Firewalker. Thanks for the great reference material mate. So did you find this solidified your own findings for a Friday? I still wonder if the bad news reactions on Fridays has any correlation to the 1987 crash. Many long time traders I have spoken to said a few events over that weekend had them thinking "oh no" before the open on Monday.

Liggerpig first off welcome aboard the TL forum and I must say your first post is superb! Thank you very much for that great post, it has a wealth of information in there and some excellent advice. You are spot on about trying to keep a tight stop at the open and like FW said, finding something to support the closing of the gap. The insight into the pits is a valuable addition to the psychology seen at the open. Like yourself I am probably most nervous at the open for some reason. I do constantly wonder why that is considering I never hold an overnight position. There is no pressure to place a trade, maybe it is somehow related to the emotions felt prior to a game of sport or competition of some sort. I personally am better at trading after an hour or so of market action because I can piece together parts of the puzzle so I may not end up trading the gaps at all. I will however paper trade it to get a better understanding. You just seem to be coming out with the great advice on this post! I often find these are the safer entries as opposed to catching the market directly at the s/r levels. The only downside is when we have a runaway market move substantially first. Hehe, this is exactly why I can't bring myself to trade a breakout system on the ES. Even when the market passes my s/r levels I still have caution about a false breakout with the need for a too greater stop level. Thanks again Liggerpig. You have provided me with some great looks into the opening gaps. In one way the odds are stacked in the favor of the person wanting to fade them. I guess it just depends on the person whether they can put the faith in the system alone.

Prediction Definition: The act of foretelling; also, that which is foretold; prophecy. From the above dictionary meaning, prediction states that you would say what is going to happen and that which you said must become true. If that is the case then those who predict would never sustain a loss. In fact they would be on the right side of the market every time. They wouldn't take a long position if the market was to go lower. I will admit that sometimes I have a strong feeling the market will do X over the Y period of time and possibly turn at Z. However I don't think those are based as much upon future predictions as they are past patterns. Spending thousands of hours watching charts you begin to pick up on certain ways the market trades. Yet how can I have those strong feelings when I believe the market trades differently every day and is why I enjoy it? I get the feeling this thread has turned from "who believes that market can be predicted?" to "what does predicting the market mean?"

Firewalker brought my attention to this thread and asked that I post something I have put elsewhere. So here it is, just something I noticed whilst watching the rain. I guess I don't believe anyone can predict the market with certainty. Just as I saw the signs of the changing weather, it didn't mean we would see the sun come out, it did mean we were seeing something happen to the existing rain. It is a hard topic to discuss though because everyone sees the market differently. The way I pick up on changes in patterns, maybe there are people out there who can say how long an existing pattern will go for. Though I am yet to personally meet someone who can do that 100% of the time.

Thanks OAC, that is a great idea. I'd imagine on a large gap there would be some type of pullback that some of the big traders would be pushing for to get a good size position should we continue in the direction the gap was made. If the odds do favor that then a scalp for the first position could work and then trail the rest for the possibility the large gap closes.

That is a very interesting find FW. It seems this thread really hasn't caught the attention of many which is unfortunate because I would have liked to hear from the experience of others. Even as MC suggested, the psychology behind why gaps might have a tendency to close. What I also found interesting about the research done on the site you linked to said Wednesday and Thursday saw no gaps made that weren't filled. Adding further weight to the theory that Wednesday and Thursday appear more likely to close. Something definitely worth investigating in my opinion.

FW those are some interesting findings on Fridays. I think what I find most interesting is that for a long time it has also been said people tend not to hold long positions over the weekend. I wonder if that is a phenomenon brought on by the news during the weekend prior to 1987. Maybe people have decided the weekend risk is too high in general? I agree that 20 days is hardly enough to go by for solid analysis. I would love to have at least 50 days analysis for this type of thing. Unfortunately I don't have access the the backdated data. If anyone is willing to do a check, I guess mainly of Wednesday to Friday I wouldn't object. I guess for me the most interesting part is of 32 gap days we had 22 gaps closed. That alone is a high ratio of 68%. There has been a long time belief that gaps had a tendency to be filled in the market but only now have I done any solid research into it. If we include the gaps from Monday and Tuesday this week, Wednesday didn't gap in my analysis, we have 24 of 34 gap days filled. Bumps the ratio up to 70%.

Hey MC thanks for the replies and interest. Now I am not sure why Wednesday and Thursday tend to be the better days. Maybe the market gets an idea of fair value later in the week. I will try to outline my thoughts on the psychology behind it as best as possible but think others will come up with some good ideas also. I think the market is ruled by the big players. Lets say we look at yesterdays range. We began a decline in the afternoon. Some of the big players may not have been willing to get on until we saw a breach of the 1350 area. If we gap down to the 1350 they will be banking on one of two things happen. We go beneath the 1350 support area or we bounce off it. If they see a breach of the support coming, they want to get the best position possible. The big players begin buying up light and selling bigger to the following thinking the market is bouncing. Trying to get the best possible entry. Market goes up and closes the gap. Then as we come back down and breach the support they can start unloading their big positions on the way down as average Joe trades the breakout move. If they see a bounce from support coming they may buy straight from the gate or have worked up their position during the pre market. They may even try to push the market down a bit over the support area to buy the breakout traders. The ES commonly tests the support and resistance levels to run a few stops and gain position. Just some ideas behind the psychology I came up with. Hope to see others with ideas as to why this may occur or may not continue to occur.

Yeah sorry MC. The gap is for the ES. What does subbed mean?

In my journal I made this post in regards to research I did on the opening gaps. It was recommended that I post a thread in here to get the alternative views on the topic as it has probably been investigated by people here before. Here is the post below with my research: As I have been noticing some big moves at the open I thought that it might be a good idea to see how I could capitalize on these moves. At first I thought there was a connection between where the Tick opened and where the market subsequently traded for the morning. Following that basis I decided to research the Tick and the open to find what the real result was. I managed to get 33 days of data to form my analysis on. It began from 17th March 2008 and went to 6th June 2008. Its not a massive amount of data to use but I'm not forming a mechanical trading system. I simply want to find an edge that can be used in conjunction with my interpretation of the market. During that period there was 21 negative Tick opens versus 12 positive ones. On 20 days the Market initially moved in the direction of the Tick and 13 times the market moved against the Tick straight out of the gate. That was promising until I looked at the values the market moved. When the market moved in the direction of the Tick it averaged 3.21 points. The average move the market made against the Tick before going the direction of the Tick was 1 point. This was ok but I didn't like the ratio. I looked further into different relationships between whether the market opened positive or negative and if the Tick followed suit. After some searching I came to opening gaps. I found that 22 of the 32 gap days we closed the opening gap. My definition of a gap was having an open 0.25 above or below the previous close. Closing of a gap I defined as reaching the high or low of the last 5 minute bar the day before. I thought this was interesting as it sort of went against the Tick relationship yet still had a 60% success rate. I would have suspected that had we opened down we would get a negative Tick reading and vice versa. To close the gap would be going against the Tick reading. Now I had a mentor that traded the close of an opening gap and mentioned some days were better than others and the size of the point gap also mattered. I have found that Wednesday and Thursday were the most reliable to close the gap. I also found that a gap over 8 points would rarely be closed. In fact only 1 in 6 gaps over 8 points were closed. If I removed these 6 big gaps from the data, we would only have 26 gap days and 21 of those were filled. Now that seems like a decent edge. Concerned as some of these gaps were only small, I wanted to find out what the size of these moves were. Considering the 3-1 ratio the Tick idea presented I wanted something pretty solid. So I recorded the size of the move that closed the gap and also recorded the size of the initial pullback prior to closing the gap. So say we gapped down 4 points to 1390 and moved down to 1389.25 before moving up to 1396.50 and coming back. The initial pullback size was 0.75 and the size of the move that closed the gap was 6.50. The results were pretty darn good. I found the average size of the move when we closed the gap was 5.60 points whilst the average size of the initial pullback was 0.67 points. The biggest move when closing the gap was 12 against the biggest pullback of 1.75. The lowest move when closing the gap was 2 points whilst the lowest pullback was zero. Now if I limited this to only trading gaps below 8 points I would possibly make a profitable trade of 1.75 points on 21 trades whilst losing a maximum of 1.75 points on 5 trades. I decided to look further at which days tended to close the gap more than others. For specific weekdays, the ones which closed the gap most commonly were Thursdays and Fridays. The ones which performed the worst were Mondays and Tuesdays. Funny as these were the same days my mentor mentioned to me a long time ago. Of the 6 Mondays, 3 closed the gap. Of the 8 Tuesdays, 3 closed the gap. Of the 6 Wednesdays, 6 closed the gap. Of the 8 Thursdays, 7 closed the gap. Of the 5 Fridays, 3 closed the gap. From here, if I removed the Tuesdays and Mondays as well as gaps above 8 points, these are how my stats pull up. Total Gap days excluding Mondays, Tuesdays and moves above 8 points: 17 Total Days Gap Was Closed: 15 Ratio of Days Gaps Closed: 88% Average Size Of Gap Move: 5.95 Average Size Of Pullback before Gap Move: 0.70 This has been very interesting. There was no strong relationship between upward and downward gaps that were reliable. I will now look at paper trading this though from these numbers this seems very much a good way to trade some of the opening days. The ideal way to do this would be getting a trade as close to the open price as possible with a stop 1.5 points away. The first profit target would be placed at 1.75 level and then using the second position to trail. Although this limits me to only trading the open during the second half of the week, it does keep the edge in my favor.