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Gapper
If a stock gaps up and is able to trade
higher than the opening price, it is showing signs of
strength. Most of the time, the gap open is a result of
good news. The strategies behind this scan are somewhat
tricky, so please pay close attention to the rules and
logic behind this scan.
The Gapper Scan can be very effective
if used properly. However it requires tremendous skill and
experience level. The purpose behind this scan is to find
stocks that are showing strength and momentum for a
potential position trade following major news events. In
order to use this scan and the strategies behind it
successfully, you must master the following guidelines:
Prior to entering the stock, you must read the news
carefully. Stay away from stocks that announce mergers.
There is limited upside potential after the news is
released. Try to focus on stocks that are surprising the
Street with bullish forecasts especially if the Street was
anticipating bearish news.
It is important to pay attention to
both the float of a stock and the short interest it has,
especially for stocks that have been trading down for a
while. More often than not, stocks that release positive
news and have large short interest and low float will
explode in price. You can find both short interest and
float on the web. If you use RealTick, you can select
“favorites” then “web browser” then choose one of
the research tools there to find more information about
the company. |
