Superior Profit Day Traders are particularly fond of one specific kind of day trade – the Gap Trade.
This is explained in detail in Superior Profit books. You may read the complete set of book from here.
For now, we look at the actual Gap Day Trade we took today – 17th Dec 2015.
Yesterday was FOMC rate decision day. After which US market including QQQ (Nasdaq ETF – Thomson Reuters code QQQ.O) jumped up. And closed near High of the day.
Today, QQQ opened above previous day’s High. We were watching it to see if it goes below Early Range Low using our Power Tune Template (that is used for Day Trading). We knew that if that happened and the Stop Loss was narrow, we would have a Low Risk High Reward Gap Day Trade Short opportunity. And it indeed happened.
We also watched that while QQQ was falling, two other major US market Index ETFs (DIA and SPY) were also falling (not shown in chart here); giving us increased confidence to take the Short on QQQ.
We shorted using Weekly Put Options. And within about 1.5 hours the position had 80%+ profit. Superior Profit traders would book at least partial profit at that point.
Below chart explains the trade.
We could identify the trade opportunity, decide on the Short and execute the trade confidently. And booked profit when the profit came.
Does your trading system allow you to trade easily and confidently like that?