Author: Paul Taglia
My name is Paul Taglia. During my four years of trading for a major Wall Street firm, I generated approximately $4 million in trading profits. I was also the firm’s top money producer in listed stocks for that period of time. I now trade full time for myself and I am also Larry Connors’ personal trader.
One of the favorite strategies I trade for my account is my Runaway Gaps Strategy.
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What is the Runaway Gaps Strategy?
As you may know, when stocks gap, explosive momentum moves can occur in the direction of the gap. These intraday moves are so wound up with energy that you’ve probably seen them follow through into close with hardly a pause along the way. But how do you find the stocks that actually do this?
In my training module: How I Trade Runaway Gaps To Capture Explosive Intraday Moves, I will teach you a set of explicit rules that allow you to find and enter stocks that potentially make big intraday moves after they gap open. And then, through numerous trading simulations, I will train you to replicate the filtering process I use every morning to find these trades and execute them correctly.
I have never made this strategy public until now. This is the first time that you will have the opportunity to learn it and use it in your own trading.
How My Runaway Gaps Strategy Works…
The Runaway Gaps Strategy enables you to quickly find and enter strong momentum-driven moves that are triggered by opening gaps. Not all opening gaps do this, but my strategy allows you find the ones that do.Here are the steps that you will learn:
- Step 1: First you will create your hit list of stocks that are gapping open, both up and down.I will show you the easiest and fastest filtering methods for doing this.
- Step 2: Then, you will identify the stocks that meet my proprietary price and volume criteria.This is a critical piece of the strategy. Why? Because certain price and volume ranges will potentially give you the trades with greatest reliability and best returns. I will show you how to do this.
- Step 3: Next, you will find the gapping stocks in which you have a decisive edge. These chosen stocks must meet 5 important criteria to ensure that they have the superior “freedom of movement” needed for a runaway move.It is only by having each of these criteria met that a gap is likely to be the beginning of a strong continuation move.
- Step 4: Now you are ready to enter your buys or shorts in the gapping stocks in which you have an edge.The entry technique I teach you will get you in at the beginning of the move.
- Step 5: After your entry is triggered, I will teach you how to manage the trade in order to make the maximum possible gains while controlling your risk.
Steps 1 through 4 must take place over the course of 3 to 5 minutes. I will teach how to do this in my module. Then, through over 25 simulations, I will train you to apply my strategy bar-by-bar so that you will be able execute it successfully on your own.
Here Are Some Of The Advantages Of Trading My Runaway Gaps Strategy
During my career, I have traded many strategies. But, for me, this one ranks among my favorites for the intraday timeframe. Here are just a few of the reasons why:
- Your stock will many times begin moving immediately after you enter it.When you apply my filtering methods, you can usually expect immediate movement in the stocks that meet my criteria. In fact, I have found that the initial thrust is usually so strong that you can often move your stop to breakeven within a few seconds after the entry. From there, it’s just a matter of trailing your stop to lock in your gains.
- No more spending hours doing nightly research. It takes you only about 5 minutesto do all the research that you need to do. And it’s done right after the market opens. The highly concentrated filtering procedure that I teach you enables you to quickly hack down over a hundred stocks to one or two viable trading candidates. You’ll get ample practice in applying this filtering technique in my simulations.
- You can lock in gains early. The moves you trade with my strategy are usually steep, one-way trajectories. In the first leg (the most powerful one), the pullbacks are infrequent. That means you canuse tight stops from the very start of the move. And tight stops mean that you can lock in greater gains with each thrust.
- Trade powerful moves, both up and down. My strategy has no directional bias. It works in both directions with equal effectiveness, although I’ll say that I’ve noticed that the shorts tend to be sharper and faster.
- The Runaway Gaps Strategyis easy to learn. I believe you will find that its logic is easy to grasp and learn. And I will teach you how to apply my strategy using the tools and indicators that are available in most popular charting packages. My goal is that you will be able to begin applying Runaway Gapsimmediately to your own trading.
- You can use “gap size” to identify the most dependable trades and filter out the counterfeit moves.One discovery I made after a huge amount of research (aka trial and error) is that gaps within a certain size range work best. In other words, for gap ups, the open must not be too far above yesterday’s high. And for gap downs, the open must not be too far below yesterday’s low. I will teach what that ideal range is so that you’ll get into real trades, not traps.
- You can trade within the price and volume “sweet spot” to increase your percentage of winning trades. In my own experience, nearly 7 out of 10 trades are profitable using my strategy. While I cannot say that you will get the same results, there is one very important observation I’ve made: The more you focus on only trading stocks that fall within a certain price-and-volume range, the higher the percentage of winning trades tends to be. In my module, I will teach you where this “sweet spot” is.
- You can trade stocks both in the same or opposite direction of the overall market. Because the kind of gap moves you trade are usually news driven, you don’t need to care about what overall market is doing. You can trade successful longs in down markets and successful shorts in up markets.