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Archive for April, 2009

Another Bad Gap Trade

So it looks like I’m going to have to rethink taking Gap trades all together.  I will admit I have gotten sloppy with my entries of late with the gap trade, but today I got a solid signal to short assuming we would close an 8 pt gap.  The 9:25-9:30 bar was opposite the gap and the on the Globex chart the 8 EMA and 21 EMA were both pointing down.  So, if it wasn’t my entry, what went wrong?  The exit.  I should know that when the ES closes 50% of it’s gap, it will face steep resistance.  Also, I should know that when the RTH chart is retesting on %r, there is a good chance we also resume the overall trend.  Well, I decided to ignore both pieces of evidence this morning.  I was so intent on the Gap closing and the money it would provide, I was ignoring what was right in my face and therefor lost $100.  The market was providing me the opportunity to take between $200 and $400 out of this trade but I was focused on the $800 a full gap close would provide.  Hopefully in the future, I’ll remember this lesson.

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