Gap Probabilities for Thursday 7/22/2010

Gap Probabilities for Thursday 7/22/2010

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This page is organized by the following color codes: 

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General Info

Yesterday's Review

Today's Forecast

Today's Raw Data

IMPORTANT NOTICE: Futures trading has large potential rewards, but also large potential risk . You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results. There is no claim or guarantee that the following information are free of errors,including typos, program bugs, error in modeling the data, internet errors, communication errors, human errors, etc.

Trade at your own risk!

These Probabilities Have lead to 100% Winning Trades so far since June 2010!

Please note that the above factual statement does not mean that it is mathematically possible for this to continue for ever.  Having said that, I believe this system will help you gain remarkable advantage over random trades.

For help with using this guide visit Fading Opening Gaps 101.

For trading in general, the best place I have found so far is  
LBR Group 
headed by market wizard Linda Raschke. Beware that most other sites are scams.

H, O, C, and L refer to High, Open, Close and Low of yesterday

Yesterday's Review

Yesterday's Forecast and signals:
ES pivot points:;                                                                     Signals:
(based on prior day's data)                                                                (based on today's opening price)

R3:	1127.00
R2:	1099.25
Fib 1.618:	1098.00
R1:	1090.00
			Sell (1080.50-1090)
Fib 1.272:	1088.25
High:	1080.75
Close:	1080.50
Pivot:	1071.50
S1:	1062.25
Open:	1053.25
Low:	1053.00
Fib 1.272:	1045.50
S2:	1043.75
Fib 1.618:	1035.75
S3:	1016.00

High Probability

Medium Probability

Aggressive

Very Aggressive                                                  

Before Gap
Table -1 and Table - 2 agree on a short trade if the market opens above close(1080.50) as shown in table - PS below.
Entry = Open Price
Target = Yesterday's Close Price(1080.50)
Stop Loss = 8.25 points from Entry.

After Gap

According to Table - 3, if the market opens bleow the low or above the high of yesterday and it closes the gap, then there is a good chance it will go in the same direction for another 4 points. I will take this trade.

Entry = Close
Target = Close +- 4
Stop Loss = 8.25.

Yesterday's Review:

The market opened at 1085, above the high of prior day in the H zone.

 Before Gap:
Opening in H zone triggered high probability set up for a short trade.  The target at 1080.50 was reached in about 20 minutes for 4.5 points of profit.

After Gap:
Opening above the high and the fact that the gap closed, triggered our After Gap trade.  This trade was to go short at the close (or stay short) and look for 4 more points.  It reached within one tick to the target in about 20 minutes.  Then moved up to the close area(1080.50) and finally went down to the After Gap target of 1076.50.  This trade stayed in green area most of the time and only had a small draw down for a brief period of time.

Today's Forecast:

Before Gap
Table -1 and Table - 2 agree on a high probability long trade if the market opens in CL zone as shown in table - PS below.
Entry = Open Price
Target = Yesterday's Close Price(1063.25)
Stop Loss = 7.25 points from Entry.

After Gap

According to Table - 3, if the market opens in CL(1061-1063.25) or HO(1085.50-1085) zones and it closes the gap, then there is a good chance it will go in the same direction(the direction of closing the gap) for another 4 points. Refer to the After Gap column in Table - PS.   I will take this trade.

Entry = Close
Target = Close +- 4
Stop Loss = 7.25.

Table - PS

ES pivot points:           Signals:

(based on prior day's data)     (based on today's opening price)

R3:	1119.00		Before GAP		After GAP
Fib 1.618:	1100.75
R2:	1094.50
Fib 1.272:	1092.25
High:	1085.50
					SELL
Open:	1085.00
R1:	1079.00
Pivot:	1070.00
Close:	1063.75
			BUY		BUY
Low:	1061.00
S1:	1054.50
Fib 1.272:	1054.25
Fib 1.618:	1045.75
S2:	1045.50
S3:	1021.00

High Probability

Good Probability

Aggressive

Very Aggressive                                                  

The Following tables are prepared daily based on more than 12 years of data.
Today's Raw Data:

Table - 1        Gap Fade Probabilities (based on Market Structure)

What are these rows and columns? 

Profit Target = Gap Close, Stop Loss = 7.25 points.

Opening Zone		> H	H-O	O-C	C-L	< L	All	All
		Short	Short	Short	Long	Long	Longs	Shorts
PF		0.48	0.90	1.12	1.59	0.84	0.98	1.02
PCT Prof		33%	52%	70%	79%	57%	66%	66%
Avg Loss		$261	$241	$232	$222	$294	$270	$239
Net Loss		$2,613	$4,825	$19,225	$5,100	$15,275	$22,400	$29,613
Loose		10	20	83	23	52	83	124
Avg Win		$250	$197	$113	$91	$185	$134	$128
Net Win		$1,250	$4,325	$21,438	$8,113	$12,763	$21,975	$30,275
Win		5	22	190	89	69	164	236
Avg P/L		$91	$12	$8	$27	$21	$2	$2
Net		$1,363	$500	$2,213	$3,013	$2,513	$425	$663
Total		15	42	273	112	121	247	360

Table - 2     Gap Fade Probabilities(based on timing)

Profit Target = Gap Close, Stop Loss = 7.25 points.

Opening Zone		> H	H-O	O-C	C-L	< L	All	All
		Short	Short	Short	Long	Long	Longs	Shorts
PF		1.95	2.75	1.96	1.67	1.15	1.28	1.55
PCT Prof		55%	72%	79%	81%	56%	69%	72%
Avg Loss		$220	$251	$330	$363	$341	$325	$294
Net Loss		$1,100	$2,263	$7,925	$4,725	$8,863	$29,225	$26,488
Loose		5	9	24	13	26	90	90
Avg Win		$358	$270	$169	$146	$310	$188	$181
Net Win		$2,150	$6,213	$15,538	$7,900	$10,225	$37,500	$40,950
Win		6	23	92	54	33	200	226
Avg P/L		$95	$123	$66	$47	$23	$29	$46
Net		$1,050	$3,950	$7,613	$3,175	$1,363	$8,275	$14,463
Total		11	32	116	67	59	290	316

Table - 3     After Gap probabilities(based on Market Structure)

Profit Target = 4 points, Stop Loss = 7.25 points. Conditional probabilities after the gap is filled.

Opening Zone		> H	H-O	O-C	C-L	< L	All	All
		Short	Short	Short	Long	Long	Longs	Shorts
PF		0.80	1.81	0.81	1.33	0.81	1.10	0.90
PCT Prof		50%	71%	52%	63%	54%	60%	54%
Avg Loss		$250	$273	$257	$261	$284	$272	$255
Net Loss		$750	$1,638	$25,425	$8,875	$9,075	$17,950	$29,088
Loose		3	6	99	34	32	66	114
Avg Win		$200	$198	$193	$200	$194	$198	$194
Net Win		$600	$2,963	$20,500	$11,800	$7,388	$19,788	$26,063
Win		3	15	106	59	38	100	134
Avg P/L		$25	$63	$24	$31	$24	$11	$12
Net		$150	$1,325	$4,925	$2,925	$1,688	$1,838	$3,025
Total		6	21	205	93	70	166	248

Copyright © Ali Mohseni 2010 Charts are created using Tradestation software.