A MUST READ FOLKS
Full Gap Down: Long
Poor earnings, bad news, organizational changes and market influences can cause a stock's price to drop uncharacteristically. A full gap down occurs when the price is below not only the previous day's close, but the low of the day before as well. A stock whose price opens in a full gap down, then begins to climb immediately, is known as a "Dead Cat Bounce."
If a stock's opening price is less than yesterday's low, set a long stop equal to two ticks more than yesterday's low.
Full Gap Down: Short
If a stock's opening price is less than yesterday's low, revisit the 1-minute chart after 10:30 am and set a short stop equal to two ticks below the low achieved in the first hour of trading.
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