Learning How To Play The Gap Trade

The Gap Trade Is Offers Emini Traders A Profitable Opportunity

When the market opens either above or below the previous day’s close, that is called a gap, or window. Gaps are actually quite common, so it’s a “formation” that day traders need to look for on a daily basis. But do gaps provide a good trading opportunity? Every trade needs to be considered on a risk-to-reward basis.

Gaps are often found when the opening price of the Emini futures market is above or below the previous day’s closing price. Here, we are referring to the open and close of the regular trading session, from 9:30 AM to 4 PM Eastern time. The reason to be familiar with gaps and to recognize them is that gaps offer the emini trader a possible profitable trading opportunity. That is because when gaps occur, they often close. By close, we are saying that the emini price will return to the close of the previous day. 

Gaps historically close over 70% of the time. A trade that repeats with such regularity offers emini traders an opportunity with a high-probability of success. On any given day, a trader knows where prices closed the previous day. On the opening the next day, if prices open substantially higher or lower, a gap exists between the opening price and yesterday’s close. Knowing with reasonable certainty that the market will revisit that price gives the emini trader an opportunity to profit from such a trade. 

Knowing about gap trades gives traders a big advantage over other less knowledgeable traders. People who enroll in my trading course learn about gap trade and how to play them. You can learn this information by enrolling in my trading course using this link.

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