Trading Systems

Gap Trading – Why Trade Gaps?


As a trader, you should definitely consider integrating gap trading into your business plan. It’s arguably the ideal way to approach this entire market. Take it from us, as you probably already know that we love gap trading.
There are so many different reasons for this. But, the primary one goes back to the bottom line: it makes us money.

How Gap Trading can make you money

How so? Well, let’s consider statistics for a moment. We believe that a hit rate of 70 percent is the ideal goal when putting together a trade system. This means that 70%, or 7 out of 10, of our trades are successful. This is just where you start.

The essential objective of trading is continuing to increase your hit rate, strategically stacking the odds in your favor. (Tweet this)

In order to increase your hit rate, you need to be able to filter out the losing trades. Gap trading is what allows you to achieve a consistently solid streak of winning trades.

Benefits of Gap Trading

Now, there are many other benefits to gap trading, other than the income that it can make you. All of the positives of this technique will allow you to live out your profession as a trader in ways that are significantly easier,less stressful, and more pragmatic. It is truly linked to the essential ways in which the market function.
Though other techniques might become less applicable or sensible as the market changes  and fluctuates, gap trading is an approach that will never go out of fashion or become irrelevant. So, it pays to become a gap trade specialist. It will give you true longevity, allowing you to maintain a steady income so long as there’s a market.

What are these other benefits, you’re asking? First off, let’s appreciate the fact that the overnight risk is eliminated with gap strategies. They get you in and out in the same day. The positive influence of this is more on a mental-emotional scale than anything. It can be easy to allow losses to negatively affect your state of mind,
even for the most professional of us. They can be frustrating, saddening, or exhausting.These emotional states will affect your ability to focus on the job, robbing you of the clarity needed to choose the best trades possible, becoming a repeating cycle.

With gap trades, each day is a fresh start.
Beginning the day with no open positions keeps you feeling optimistic, as if anything’s possible. It’s this kind of attitude that will allow you to make clearer, stronger, more confident choices, which will lead you to becoming more successful. This is a common sense example of your attitude affecting your altitude. Gap strategies keep you moving forward, without worrying about what happened yesterday or what will happen tomorrow.

There is a predefined entry, exit, and stop to gap trading, thereby making it less stressful on you.

Long-term trading can be profitable, of course, but it can also put much more on your plate, as well as provide more pressure in the decision-making process. This can rob you of the energy needed to focus on actual market activity, instead of strategies for the future. Gap trading provides this predictable strategy for you.
It becomes a second-nature groove that you fall into, from day-to-day, leaving your mind free to focus on the market. Take a look at our Dow Jones Excelsior Alert Service for an example of this.

Another benefit to gap trading is the fact that it allows you to make full-time profits through putting in part-time hours. Trades finish quickly and signals mostly occur early in the day. Therefore, you’re required to work less, free to use the day to do whatever you want while your profits build. This is another reason why gap trade is just an easier choice. It’s less demanding. It also means that there’s less temptation to over-trade. The more you work, the more you can be compelled to engage in trades. This only heightens your risk for losses. It’s similar to sitting at the blackjack table for too long. The more the opportunity provides itself to gamble, the more you’ll be willing to. Thus, the more money you’re apt to lose. It’s important to learn how to minimize your trading to only the necessary amount and the sheer function of gap trading teaches you how to do this.

Why is it called Gap Trading?

Gap trades are given the name for a reason. They tend to fill regularly. Therefore, this gives them a high win rate. Besides the obvious reason, this is beneficial because, again, it keeps your confidence levels up, which will positively affect your approach to the job.The more losses you have to take, when you’re trying to break into the market or ride some current trend,the more it can negatively impact that confidence. Yes, we are businesspeople but it’s hard to not allow emotions to come into play. Nobody likes to lose repeatedly, especially when they’re first starting out. So, working with gap strategies can be a great way to get your foot into the door, beginning on a more successful note and thereby feeling energized and empowered by that success.

There are lots of opportunities available within the thrum of gap trades, which is, of course, another benefit of this system. The gaps that you have to choose from include closing gaps, extreme overnight POM gaps, POM gaps, and intraday gaps. Who doesn’t love a bevy of opportunities? The more opportunities you have, the regular your income can become. There are also a very large slew of markets that these gaps can be applied to. This is yet another way that gap trades can make your possibilities seem endless. Gap trades also work in bull and bear markets, giving you year-round opportunities for trade, no matter what the market’s condition or direction is. This will become your ace in the hole whenever economic conditions deteriorate. It gives you security in times like these.

Gap Trading vs Long-term Trading

There’s something very uncomplicated about gap trading that appeals to many. Again, this simplicity directs your attention back to the market’s activity, where it really matters. You’re not going to waste too much time trying to figure out the system and, in turn, will become more of a master at it in quicker time. And finally, there isn’t a need for tops and bottoms in gap trading. The short-term quality of gap trades means that you’re not going to get overly attached to any one trade, believing that it will recover. You don’t have to think about how to exit or bounce back from a trade if it fails. This is one of the biggest mistakes that long-term traders make, resulting in a spiraling mess.


So, as you can see, there are many reasons why you should be gap trading. To help you become a specialist in the Gap we have a trading room service where we literally take you by the hand and walk you through each trade that we ourselves are making (which includes lots of gap trades). Let us show you how to make a full time living from part time trading as we do. Subscribe here Magnetic Trading Room Service.

Imagine if in one fell swoop you could remove your losing trades?

Magnetic Short-Term Trading, the first course of its kind that shows you how a professional trader writes a daily report predicting the outcome of the markets.

Learn More about Magnetic Short Term Trading Blueprint