Trading as a game

Andy Bushak always been interested in trade. It traded at a time when I was in the Naval Academy in Annapolis, and when he was a halfback playing football for the "Cleveland Browns". However, Andy did not consider his career as a trader when started, yet he has not received adequate commercial "education." He is actively traded on his own account since mid-1980's, and sometimes sold to hedge fund. Currently, he works with Tom Joseph in the "Advanced GET" and regularly conducts seminars with Michael Kvanbekom. He has made a significant contribution to the development of many concepts of price and time, working in the "Advanced GET". In trade, he specializes in intra-day trade futures, trade on the movement of currencies and positional trade shares.

Trading as a game
Trade like a game of football. What determines the professional level of your game? Preparation is key. A whole week passes before you go out to play with opponents. You are viewing a movie from playing another team, you start to follow the team, players, etc. Then, you treniruetes. When it comes to play, you do not have to think - all that you do - this reaction. I do the same when preparing for the trade. I collect information from more market pictures. I look at some long-term charts to check the trend and see whether there is a long-term trading opportunity.

I work with some tools and Hanna Fibona chchi to obtain good levels of support and resistance. The following graph shows the price value at the time when I zafiksiroval this piece.

Daily schedule for the S & P 500 E-mini with the key Fibonacci levels

Since I did the homework, then when the market starts trading days and start to develop the model, all that I must do - is to respond appropriately. My reactions are guided by my level of support / resistance and trade strategy, based on rules that correspond to this situation.

Therefore, as a result, trade has become as easy game. Follow the schedule of shows in my day, and levels of strategy that was used with them in this case. The following report shows the actual long position entered about 50%-level recovery, after having been installed at least the 5th wave to my predefined levels. I went out 4 contracts at the level of awards / risk on the same day and left a 1 contract for the next day from placing the appropriate stop-order.

A 15-minute schedule for the S & P 500 E-mini and a list of transactions

Market position works in the same way, but you have a little more time to think about it. You conclude their transactions in the afternoon, possibly even on a weekly schedule, but it is the same process. You did your homework, the market is in your target zone, and you just react: you have your orders, and the foot and plan their exits. Maybe you leave some of them, because you can never see these prices again. Traders, who have seen me in action over the years, know that I am holding some key positions in the stocks, like IBM and AMGN in those years. What I'm trying to do - as soon as possible to move to risk status.

For example, with the shares of which are at historically low prices, I take the profit from the share positions and regulate its stop-order in such a way as to remain loss-free. If the trend develops, I will still remain at a profit. If the trend continues to evolve further, I entered the market at a price that may not give to get back.

If you have some good rules, you should get rid of unnecessary emotions that can hinder trade. Once you reach the state where you do not have to think too much and you just react to events, the emotions are under control. The only way to achieve this state is to know his subject. This is what we are trying to do in our seminars. If you know "their opponents on the playing field" (in other words, you've done the necessary homework in advance), then play with time becomes much easier. I always tell people that I have the best job in the world. I continue to trade full-time and spend seminars to communicate with other traders. For me, trading on E-mini allows you to offset the operating costs, and my position on the transaction shares typically have the highest incomes.

www.esignaluniversity.com

When The Market Goes Against You

Eyb Kofnas is president of an educational Web site for traders forex market - Learn4x.com. The greatest challenge for the trader with trading on the FOREX market there, when he opened the position, and the market begins to move in another direction. Responses to emerging situations are the true test of endurance and intelligence trader.

This paper is dedicated to offer a few strategies that can help in such cases.

Here are the traditional methods of limiting the losses:

1. Stop order: The freeze order shall establish control over the passive losses. When you open a position, you can immediately place a stop order. One of the rules for placing stop orders for the purchase, for example, it would be a stop-order on the previous wage, or at the level of support. When selling, you have to stop a warrant for a previous maximum or on the level of resistance. This allows you to control the loss against extreme movements. However, this does not guarantee the exact performance, because, depending on your broker, the majority of stop orders become market orders when they are activated. In extreme movements, your stop order will be activated, and in fact met, when the price may be too far away. The negative feature of stop orders that recent levels of support and resistance is often tested with a view to increasing the stop-orders. Many faced with a situation where the position is closed by a stop-order, and then the market started to move in a direction which was originally expected.

2. Stop-turn: In this option, you open the position to buy or sell and post stoporder with an additional lot. For example, when buying a lot of euro 86.50, you place an order for the sale of two lots of Euro 85 95. This strategy keeps you in the market, and expands your position. Of course, this does not protect you from possible re-turn the market in the initial direction in which you will find yourself on the wrong side.

3. There is no stop-orders. You open a position and leave her alone. This strategy allows the market to work. There are two disadvantages: a) when the market intensely moving, you remain attached to the wrong side. b) you have to test their patience. A bit long, people may look at the position, which continues to build up their losses. The advantage is that the currency pairs fluctuate over time and have a wide range. If you focus on the longer time scale, the price will tend to remain in the direction of the trend, which is dominant.

Fortunately, there are alternatives to these strategies. Traders are not limited to these three strategies. We'll call this new technique for risk management - Simultaneous buying and selling. Some companies that provide services in the FOREX market offers this feature. Company "FXSOL" is one of the brokers and their trading platform podserkivaet it. We recently spoke with Tom rafts from "FXSOl" on this approach.

"There are several reasons to open a multidirectional stand on the same currency pair," said Raft. First - this is the psychological advantage of the fact that to always be involved in the market. Even though the position zahedzhirovana, and the customer can not lose money because of adverse market movements, it is still emotionally involved in the market and can tailor the hedge in accordance with how the situation develops in the market. The second relates to the ability to remain involved in the market during a limited range of the market. It helps a trader to avoid quick turn, are worst enemies of traders. "

In this strategy you open a position and, if the market moves against you, then you open an opposite position. They will not vzaimozakryvat each other. The position on the purchase, there is the account in conjunction with the position to sell. What makes this really - fix the situation and allow the trader is not the time to manage risk. Say, for example, the position moves in for the purchase of lucrative direction. You can leave a position to sell as is and add to positions on a purchase.

If the market starts to move back, the position on the sale can be closed when it becomes profitable. The advantage of this approach is that it allows the trader quietly assess market conditions and does not become hostage to these conditions. Trader can choose how to balance between these positions. A full hedge occurs when a position in the buying and selling equivalent. This freezes the ratio of profits to losses. But it does not freeze position.

If the profit from the position at one side quickly reaches a certain level, they may be closed for a fixed profit. You can add more to one side and to increase one direction than another.

One of the best applications of this technique is possible when trading ranges. When there is no certain clarity in which direction to go, you can open the position to buy and to sell and let the market come to you for help. To do this, you do not need to test its strength.

While it is not absolutely oshibkoustoychivoy technology, it certainly deserves attention. Ability to be on both sides of the market at the same time is rarely used, but probably could be applied more effectively by most traders.

Forex Magazine
based on www.futuresmag.com

Professionalism in the trade

If you are serious about becoming a successful trader to full-time, you can be helpful these comments. Otherwise, stop reading and do not waste your time.

To become a successful trader requires special intellectual abilities, as well as the ardent desire and self. You can be the best in the world trading system, software and platform, and yet not be successful. Why so? Almost always, your character and control over emotions determines your destiny. Everyone must change and improve the situation, so that, ultimately, to become so, by whom he wants to be in trade. Trading discipline is born out of control emotions. Typically, traders themselves are a very bitter enemy. Clearly, the market environment is critical for success, but not as critical as control of emotions. You need to gain control in order to be successful. There is no substitute for this control. As you can understand what your emotions out of control? Lack of ability to stop when you lose a good indicator.

How do you manage your emotions? Just try to develop patience and focus on the system, rather than the results of your actions. Stay immersed in the present. In other words, stay immersed in the trade, reading charts, indicators, the presence or lack of momentum in the market. This way, you are connected to the market and overcome the emotional proclivities. Do not try to outsmart the market. Stay away from the "results" or as I call it thinking "what if", because it destroys your objectivity and focus on what is important and creates a process of negative thinking. If the golfer to focus on the fact whether he will trehfutovy shock and effects of errors, instead of the implementation of impact, which is required for a successful outcome, it certainly lose this strike. It "puts a heavy cargo on the shoulders, worrying about the consequences of performance or failure of this strike. Especially if there is pressure to do a double kick, sending its share of responsibility in a team of two persons, etc. The same thing happens in commerce, except that there is usually a much larger pressure associated with this activity. This could almost be a question of "life and death" if you allow him to become one. These reflections on the "result" or "what if" makes you lose your concentration on the really important things that will help you be successful. What is important is the process of trading, performed by a step-by-step. It really is as simple as it sounds. At least it was for me. Once I had this vision in the approach to the market, I got control, in which I needed, and things started to straighten. Remember that the only thing you can control when trading in the market - this is how you react to things that you see. Controlling your emotions is crucial, with the right response to those situations that you see. Let's look at the personal aspect. I have had unfavorable family (my wife hated my trade), by a small and a large number of failures that I had to overcome, when I began trading. Familiar, does not it? The only way to get out of this situation was to develop a solution that I will be successful and to refute all of those skeptics, regardless of everything. More importantly, I decided that I achieved patience and slow down things in my world of commerce. I took this notion of "deceleration of things" from the allegations that I have ever seen in a very successful professional athletes and some of the principles of learning that I used in the training of leadership in military schools. When professional golfers, professional basketball players, and, interestingly enough, many drivers of "NASCAR" was very successful, it is like that all slows and it becomes easy to see what to do and how to do it. In the art of war, with enormous strain of battle, the same thing happen when a leader is working properly. This is like a time-lapse. With this in mind the approach I chose to trade in AB, because the market seemed to be moving more slowly than the NQ or ES. I tried to choose methods and time scales (R100 and R75), which were slower in terms of signals. This slowed things happening for me and helped to gain control over my emotions and decision-making. I was more fortunate. Then I found a chat with a man named Woody showed me a way to remain calm in the face of disaster, and remember that the course will be the best deal. Also, I found a software which allows some pretty good template to suit my purposes. However, more importantly, what I did, it took a conscious decision to learn to manage their emotions. I wanted to learn to control themselves. I do not let anything or anyone hinder me to achieve this basic goal. It worked, but every day brings a new struggle to achieve this. But once this was done once, there is confidence that helps you do it again and again. Emotions never go completely - this is quiet the panic with which the majority of traders constantly lives. You can only learn how to manage them. Do this, and will be much easier to succeed, you are thirsty.

Forex Magazine
based on www.ensignsoftware.com

Six of Forex

Few traders stop to consider the context that determines the Forex market, although it would be all. Since the Forex market is increasingly playing the role of retail investment environment, you need as much detail as possible to explore all the nuances of the environment and the rules that will survive and successfully operate in the investment environment.

Analysis

• Who: to know the Forex market actors that shape the markets;
• Why: to understand the nature of forex market and its attendant opportunities;
• Where: Find the best dealer, is suited to your goals;
• What: choose a shopping tool, based on your preferences;
• When: To determine the time when the transaction would be most effective;
• How to: pick up a set of analytical tools that really improve your trading.

Action

• Draw up a personal trading plan;
• Find solutions that will help you execute your trading plan, step by step.

Analysis

For most traders, a comprehensive trading plan is a false ideal. In particular, in the FOREX market the illusion of easy money often distracts the trader from the reality, which is a difficult and painstaking work. But how can attest to anyone who has achieved success in trade, commerce - so, above all, discipline. Trading requires a plan based on extensive market knowledge and ability to carefully and consistently apply this knowledge. The main component of any trading plan - an understanding of context, which defines the surrounding market environment.

Six of the market Forex
Movement of prices in the FOREX market to resemble traffic shoal of fish. At one point - an absolute harmony, the next - a complete chaos. As an observer of these jambs of fish, you believe that you can accurately predict the direction in which it cannot go every time? Are you ready to bet on this?

What makes the fish go that way rather than another? Why do they operate together in an instant, moving with force and precision, and move in such a way that seems to be an infinite number of directions? There is no way to know if you can not feel that sense of fish every time they move. Pisces have an instinct as to the nature of their environment. They are born to understand the context of all the things around them, and can react accordingly. Of course, if you have such an understanding, you would have been far more accurate predictor of the movement of fish! Trading on the Forex market in this sense is not very different - we must develop a sharp sense of what is happening around us. Can we ever accurately predict every move in the FOREX market? Of course not. But we can use our understanding of the context of the market - the six forces of forex - to make better, more cost-effective choice of deals. Once we understand these forces, we can build and work within the framework of a comprehensive trading plan:

• Who sells at Forex? You must know who is participating in this market, why are they successful and how you can emulate them.
• Why trade Forex? It is possible to obtain excellent income trading at Forex, but not for all participants. You are one of them?
• Where you need to sell? Select service providers that can provide you with the opportunity to effectively sell your style.
• What you need to sell? Select a currency pair, methods of entry, exit and management of money, which maximize your income.
• When you need to sell? Deal, when the market environment is most likely to provide the best conditions in order to sell on your system.
• How should you trade? Deal, using the methods that have proven their ability to provide maximum efficiency.

Knowledge of these forces and how they work, is the main component of your success as a trader. Figure 1 shows these 6 forces, their relative rarity, and their impact on profitability.


The lower you are moving to this scheme, the less you will find traders who understand an element of the overall context and the more revenue you can achieve with the trade.

Who
Far more important than knowing who trades in Forex, know who trades in Forex successfully and how they do it. Players in the Forex market work with widely varying horizons. When one of these players are in the market, the impact is proportional to force the trade initiator. This effect may play a role in the short term, a radical change in prices, and could play a long-term role in determining trends. Figure 2 shows the main participants in the market Forex.


Each group of participants has a different attitude, goal, investment horizon and market impact. A key difference among these market participants is their level of sophistication, which is determined by the following elements:
• Managing money
• Aims to Profit
• Level of automation
• Quantitative ability
• The ability to study
• Level of Discipline

Of course, there are sophisticated and inexperienced banks, governments, corporations, investment funds and traders. But among these segments, the individual trader has the lowest level of external control. Taking into account that the government, banks, corporations and investment funds follow the instructions and limitations (to some extent), traders are only limited by the level of their capital.

In the absence of external constraints, traders are divided into two groups: those who can impose internal constraints, ie discipline to their trading strategy, and those who can not. Those who can impose this discipline, we call the experienced trader. In a zero-sum game of trading in the FOREX market, the trader uses the hard tools and strategies that mimic instruments have a very sophisticated institutional participants to extract profits from the party, a newbie. Only hard-trader is able to achieve positive results in the FOREX market.

Why
The volume of trades in the FOREX market in recent years has increased, as more and more individual traders to earn a living, selling it, and the popularity of riskier investment vehicles like hedge funds, has increased. The main incentive for these investors is the higher yield, but on the foreign exchange market, four major factors create a unique investment environment:

o Liquidity
o Leverage
o Convenience
o Cost

In any other market you can not find the conditions that are favorable to the investor, at least at first glance. However, using their advantage of these favorable factors, you should always keep in mind on their back side.

Liquidity
The liquidity of the market have a high degree of transparency, even when large transactions occur. Worldly-wise trader understands that it means: the Forex market involves very large players. Because traders are growing in their sophistication, they understand that these big players have a significant impact on the price, and monitor their entry into the market.

Leverage
The low margin requirements in the FOREX market allows to obtain the correct analysis of huge profits. However, in the case of an incorrect analysis, the multiplier effect of leverage also increases the loss.


The worst scenario - a series of consecutive losses. Knowing how many consecutive losses your system can afford is a key factor for the preservation of capital. (left - the number of consecutive losses, the top - the lever, right - the remaining percentage of capital)

Accessibility
The fact that you need to go to sleep or spend time with his family, does not stop the functioning of the market Forex. In other markets you can trade during certain hours, usually from 6 to 10 hours, which are clearly defined. On the other hand, trade on the forex market requires a 24-hour monitoring. This can be achieved through the automated trading system or, less optimally, through a defined stop-order and limitordera or physical control of the transaction.

Price
"No fees" - a marketing slogan, many dealers, that is perceived as a significant profit. But the fact that there are no commissions, does not alter the high transaction costs, spreads paid to dealers through the purchase / sale. There is no doubt that liquidity, leverage, comfort and operating costs available in the FOREX market are excellent tools for investors, but not always. As easily as these tools can be used to create capital, they may be using the wrong lead to the destruction of capital. Beginner traders destroy capital, and its sophisticated pose.

Where
One thing is to choose a dealer, and quite another - to choose the right dealer. Offers service dealers can take many forms, and each dealer usually has one or two major features that they bring to the fore. In the analysis of the dealers, you understand and appreciate all of their proposals for the service, and then apply it to your style of trading that pick for themselves the best dealer.


Understanding the basic components of the trade plan was crucial for successful trade. All these factors work together. Trade currency pair with a wide spread, using a short-term signals the entrance and a great arm, probably will not be the most successful strategy. On the contrary, trading foreign currency pair with a narrow spread, using medium-and long-term signals to the entrance with a small lever, has a greater chance of success.

In the final analysis, currency pair, the signals and the approaches to the management of money should be combined, and without controversy. Beginner traders make critical mistakes, trying to hide together strategies from different sources, instead of systematically constructing, testing and building a comprehensive plan of trade. Hard-trader, which makes this a difficult job, working with the trade, which creates opportunities for consistent profits.

When
Forex market operates 24 hours a day, but whether the market activity of the same all the time? Of course not, but many traders do not take into account this fact in their work. By studying historical price data, you can compile the following tables of market activity.


It is better to sell at the most opportune time. The table presents the average trading ranges for the four major currency pairs. One of the best ways to confirm the technical indicator - this amount. When strong, the indicators tend to be more accurate. Unfortunately, no data on the amount available for the Forex market. Use of trade ranges - following an effective tool. With these data at hand, traders can more carefully evaluate when to trade. Not only the technical indicators will generally be more accurate at different moments of the day, but there is a potential for greater profits, and the potential for lower losses at other times of the day. Consider trade on the EURUSD at 10.00 EST against trade 22:00 EST. In the first case, the average trading range is 30 points in the second - 10 points. Entrance to the market during morning trading creates some interesting opportunities - the market can go with you or against you, but you should be ready to move in any case. On the other hand, if the market goes against you by 10 points in 22:00, as far as you concern? Probably not as good as if it was 04.00.

Anyone can trade based on technical indicators. Beginner trader, in particular, ignores the importance of "when" to trade. Worldly-wise trader uses timing to their advantage, creating opportunities for profits and limit losses.


As
Once an understanding of the external trade is over, the hard work begins: the trader must understand their own consciousness. External items are easy - they are usually rational, evidence-based, consistent and streamlined. However, the trader's mind away from all this. Trader goes through a huge number of emotions and thoughts during the trading. Some of them have a negative impact, some positive, but very rarely see a trader, who would be consistently followed his trading plan.

Emotions, or lack of discipline are the biggest enemy of every trader. This is so true, that could be argued that the discipline is a more valuable asset than the very commercial capital, because capital can be supported only with discipline. We can not say that a trader can bring some value - it does. In moments of clear, objective examination, many traders, even novices can build excellent trading system. These systems can benefit their understanding of the market Forex. However, once live, the system suddenly dilapidate.

Why?
The simple reason is that emotions should not be present in the trade. Emotions compel the trader to act differently after big wins or losses. Emotions compel the trader to act is absurd when there are large movements. Emotions compel a trader to apply his trading system inconsistently. If you've done a review of successful traders, you would find many similarities. Traders understand and apply all the forces of the market Forex. They are usually traded in an incredibly simple trading systems. They use a conservative, well-thought-out philosophy of managing money, and they trade with absolute consistency. For the institutional investor, absolute consistency is not a problem because they have more staff and more resources at their disposal. For individual traders, there are three groups. Those who trades with consistency, those who traded with the manual sequence and those trading with an automated sequence. Beginners, of course, are traders who benefit from the transaction to the transaction. An individual trader who uses a consistent discipline or automation as the basis for its trading activities, maximizing their level of sophistication.

Action
Worldly-wise trader understands market forces six Forex. He works with the understanding the market environment, and this understanding lies in its commercial run. To succeed in trading on the FOREX market, you must become a skilled trader.

Forex Magazine
based on www.fxstreet.com

Gaps: friend or enemy of the trader?

All the traders used to see on the graphs of market gaps between the price the previous day's closing price and the current opening. Call these breaks gepami. Causes analysts interpreted in different ways, primarily based on fundamental analysis. Even more vague possibility of filtering gepov, not to mention their rational use.

Literary floor in tehanalize

Gap - this is the English literary word (not an abbreviation, as many mistakenly believe), which can be translated into Russian as «gap». In economic terminology, this term is used very broadly, and refers to the difference between any of the values. Thus, gepom called the excess of assets over liabilities. The greater the percentage gap, the higher the potential risks of interest. There is even a risk-management industry, which is called the «gap-analysis».



The technical analysis of the word «gap» is quite unambiguous in nature - it is visible on the graph bars or Japanese candles, based on prices of opening and closing the gap between the current candle or bar and the previous candle, or bar. On the other graphs, such as a linear graph or graph tic-tac-toe, gepy not be able to see.



Figure 1 are gepy in the afternoon schedule of shares of RAO UES. As can be seen, they occur more frequently. On the stock market gepy - is not uncommon, though, such as round-the-clock on the FOREX market, they occur much less frequently (Fig. 2). If the action does gap up or down, it's quite a significant signal that can be used by the trader to make a decision. Some analysts believe the market shares gepy signs of accumulation or distribution.



On the stock market gepy - is not uncommon, though, such as round-the-clock on the FOREX market, they happen much rezheNa stock market, there are two options gepov: arose as a result of reported revenue growth of the issuer and the artificially induced brokers. In the first case, the value of the gap indicates the potential power of the trend, which is directed towards the gap. The immediate cause of such gepov rooted in high expectations of analysts. Naturally, working in the market of large institutional investors are beginning infusion of money in the stock issuer, show more profitability. In fact gepy suitable for fashionable now trade on the news as a confirming factor in technical analysis. The task of the trader in this case - to catch a gap in the time gap since it is an opportunity to continue the rollback.



This, of course, is the gepah up. Gepy down, respectively, are due to the reported decrease in income issuer. It should be noted that gepy down - more rare than the top. They speak of any «great shock», occurring at the issuing company.



As a consequence, we can expect the continuation of the fall of the company's shares. So investors should sell their shares as soon as he saw the gap down. It should be noted that not all gepy developed under the influence of news, the authenticity of which is proved. Often, these news stories may be mere rumor, which, in particular, now accrete «YUKOS case».



Pro and contra

There are a number of strategies which say the contrary: the gap is not continued, and izlet trend, and already the more it is a new trend. For example, if the gap was formed up, should get up in the short position and wait for the completion of the trend. This is called gepom izleta, it forms a new maximum price. Similar gepy can be found in the charts of financial instruments (Fig. 3).





But how to find this pattern? It is this strategy correct?

The issue is a discussion. The point is that the gap izleta may arise precisely because of the increased flow of investment into the company. In this case, technical analysis is powerless to fundamental factors, and clear all the failure of this strategy. It should be noted that, according to many analysts, «threshold impotence» technical analysis are, for a variety of sources, the infusion of 5% to 10% of the total capitalization of the company. But how do you solve this dilemma, with the only technical analysis? It is obvious that the direction toward the dominant trend observed at the opening day of the gap - the gap is continuing. In this case, it is advisable to open in the direction of gepa. However, it also cuts both ways - if the gap is too big (criteria value, the truth is rather vague), may be followed by rollback.



But the gap can be strong and stop the trend when the market goes self-doubt, investors that are long ranged with the decision, and, finally, seeing the force of the trend and opened positions. Such gepy typically marks the beginning of retrogression, or even a change of trend. Open positions against the trend in this case it is necessary, exposed pre-loved stop-loss just outside the peak. You can also use gepy izleta trend to fixation of existing profits.



Types gepov

Most often we deal with gepami on daytime schedules, raised at the opening of the market. At all-day market FOREX such gepy sometimes occur after the weekend. Analysts have developed a set of rules for this type of gepov. Thus, it is believed that gepy the opening of 60% of cases may be during the day partially or even completely filled. Similarly, external bychi gepy opening (outside of any level of resistance or support) up to a new maximum of 60% of cases. Up to 70% of the likelihood of achieving the new minimum in the case of Bear external gepa.



If the gap is not filled within the first 15-30 minutes after the opening of the market, this is a strong signal that the market will move in the direction gepa opening. There are several types gepov:



- Complete breakdown of top (opening price of the day above the previous peak);

- Complete the gap down (opening price of the day below the previous minimum);

- Partial break-up (opening price of the day above the closing price the previous day, but below its peak);

- Partial break-down (opening price the day following the closing price the previous day, but above its minimum).



There gepy breakthrough. They are fundamentally different in that there are important breakthrough in the levels of resistance or support. Price falls sharply from the previous trading range, which is reflected in the chart bars in a gap between the current and the previous bars. If such a gap is formed at the end of a technical analysis of the figures, it can serve as a strong sign of confirmation of this figure.



Further movement can occur naturally in the breakthrough, which can be very dynamic. Usually gepy breakthrough is accompanied by increased trading volume and volatility. The bigger the gap, the less likely it is closed and the return of the price back.



Trade at rupture

When you trade through gepov should pay particular attention to market volatility. You need to install a range of deviations of the price a financial instrument, which saw the gap. We recommend that you put a floating stop-loss, the amount of which depends on market volatility.



The strategies of trade on rupture often was far from scientific methods resembling guesses. But others are mathematically precise trading strategy, which are based on formulas in MetaStock.



The strategy to develop trading systems, looking gepy, simple: in a primitive form of general enough to calculate the gaps between the opening price of the day and the previous extremum. For example, both built below the trading system, which is part of the market towards full gepa:



Enter Long:

L> Ref (H, -1) OR Cum (1) = LastValue (Cum (1))

Enter Short:

H


The results of testing this trading system for shares of RAO UES of Russia are as follows: the average profit margin - 99 points in the month, 8 to 14 profitable transactions unprofitable.



Figure 4 shows the schedule for return of the trading system. The second trading system differs from the previous one that also takes into account the partial gepy, allowing for the possibility of using opt1 regulate the amount of gepa.



Enter Long:

N1: = opt1; L> Ref (HHV (H, N1), -1)

OR Cum (1) = LastValue (Cum (1))

Enter Short:

N1: = opt1; H
OR Cum (1) = LastValue (Cum (1))



When opt1 = 4 the system shows the result of 204 points in a month, 3 winning deals against one loss (Fig. 5).



As we have seen, described the system outputs are not. Next the system is equipped with an exit, is also on the difference in prices of opening and closing of neighboring days:



Enter Long:

N1: = opt1; L> Ref (HHV (H, N1), -1)

OR Cum (1) = LastValue (Cum (1))

Exit Long:

N2: = opt2; C
Cum (1) = LastValue (Cum (1))

Enter Short:

N1: = opt1; H
Cum (1) = LastValue (Cum (1))

Exit Short:

N2: = opt2; C> Ref (HHV (H, N2), -1)

OR Cum (1) = LastValue (Cum (1))



This system provides 6 to 5 of profitable transactions unprofitable. The result - 201 item per month (Fig. 6) - about the same as the second system.





Needless to get involved is not worth

From all the above we can conclude that to develop a strategy based on gepov - case ungrateful. No clear criteria for «truth» gepa, and it is unlikely that they will be worked out by technical analysts. Trading systems based on gepov can be used, but the MTS with other technical indicators give better results. Moreover, the developers, testing trading systems in the stock market, is a question as to filter out gepy. This universal tool has not yet been found. It is indisputable that in different markets, the frequency of occurrence gepov quite different. Thus, in the Russian market chaotic nature of speculation in illiquid stocks, of course, creates gepy, both public and intradey. On the NASDAQ gepov much less than the NYSE, while in FOREX at all unusual museum, which, if happens, it serves as food for a long reflection on the fundamental causes of the analysts of this phenomenon and its possible consequences. So what is the gap Technical Analyst - friend or foe? In obschemto any technical factor can be a benefit. Also gepy can be used, for example, as a powerful means of identifying izleta market at the close of the existing position or to accept a certain level of a breakthrough when trading on the break. But overly enamored gepovymi strategies do not.

Roman Mamchits