Trading Gaps

by Ted Heller
(toronto, canada)

I didn't see this mentioned on the trading gaps article on the site here. A low risk, high probability trade usually awaits you when price first returns back to the origin of the gap. The original fundamental reason that created the gap, a large imbalance of buyers and sellers, leaves behind a large number of limit orders waiting to be filled there in the direction of that gap. If volume is not increasing as price trades back towards that gap, you've got a great pivot point to take your short or long at.