Gap & Go Setup's
One of my favorite setups to trade during trade earnings season!
When earnings season is in full swing, every trader has his / her favorite setup to trade. One such setup for me is the Gap & Go Setup.
Here's how I trade this Gap & Go setup during the earnings season:
Here's how I trade this Gap & Go setup during the earnings season:
- Be aggressive & Buy as close to open price as possible
- Place stop 3% below entry price
- Sell some profits at target levels
- Ride more than half size position into the next day if stock closes at the highs
- Stock should be up 5% or more in pre / post market hours after earnings announcement.
- Breakout from at least a month's range
- Should gap up to New all time highs
So, let's talk more about how I applied this setup to ROKU & profited about 20% gains in 7 trading days:
ROKU reported earnings on May 8th, 2019 after hours & there was a positive reaction to this news as it was up about 7% post report.
So I mapped out some levels in ROKU Daily chart & got ready to trade the Gap & Go setup the next morning.
Here was my plan before entering this trade:
-It was set to open near 70
-Plan was to go long @ 70- 70.50 area with stop @ 68.30 (2.4% risk)
-Target's 75 , 77 ( Cup & Handle target 120)
-ROKU opened near 70 on the morning of May 9th. Placed a market order right after open & got filled @ 69.50 . Stop was set @ -67.40 (3% risk) . Tweet for reference
ROKU reported earnings on May 8th, 2019 after hours & there was a positive reaction to this news as it was up about 7% post report.
So I mapped out some levels in ROKU Daily chart & got ready to trade the Gap & Go setup the next morning.
Here was my plan before entering this trade:
-It was set to open near 70
-Plan was to go long @ 70- 70.50 area with stop @ 68.30 (2.4% risk)
-Target's 75 , 77 ( Cup & Handle target 120)
-ROKU opened near 70 on the morning of May 9th. Placed a market order right after open & got filled @ 69.50 . Stop was set @ -67.40 (3% risk) . Tweet for reference
As you can see in the 5 minute chart above , ROKU wasted no time in breaking out of all resistance levels @ $74.35 & $77.57. It was soon in all time high territory
I took profits over the next few days @ $73 78 , 83 & 87 for an average of 19.63% gains.
I took profits over the next few days @ $73 78 , 83 & 87 for an average of 19.63% gains.
Now let's talk about how this gap & go setup would have worked for RH which reported earnings on Dec 4th,2019 After Hours:
RH was a leading stock in a leading sector trading near all time highs before it reported earnings on Dec 4th, 2019.
Here's how the chart looked Prior to Earnings:
RH was a leading stock in a leading sector trading near all time highs before it reported earnings on Dec 4th, 2019.
Here's how the chart looked Prior to Earnings:
As you can see in the chart above, RH was trading near all time highs of 208.33.
This should be the plan to trade Gap & Go setup in RH:
It was set to open near 209.50
Plan should be to go long near 209.50-210.50 right at the open
Place stop @ 205 (2% below entry)
Target's based on measured move -> 230, 240 & all time highs
It reported decent earnings and was up about 2% near 209 before the market opened on Dec 5th, 2019. Be aggressive, place your market orders after open & get in.
Here's a 5 min chart of RH & how it took off right after open.
This should be the plan to trade Gap & Go setup in RH:
It was set to open near 209.50
Plan should be to go long near 209.50-210.50 right at the open
Place stop @ 205 (2% below entry)
Target's based on measured move -> 230, 240 & all time highs
It reported decent earnings and was up about 2% near 209 before the market opened on Dec 5th, 2019. Be aggressive, place your market orders after open & get in.
Here's a 5 min chart of RH & how it took off right after open.
As you can see above , it trended higher all day without any pull backs. Profits on half size position should have been taken at 230 & rest half should be carried over into next day. This will assure at least 10% profit on this trade giving the trader more cushion to hold this for a longer period of time.
Now take a look what RH the next day. It continues higher & hits second target of 240 resulting in 14% gains in just two days. Partial profits can be taken at this 240 level or traders can follow IBD's 8 week hold rule.
Thanks for spending time on reading this post. Hope you gained little more insight on my Gap & Go Trading Strategy & why its my favorite setup to trade. See you in the streams.
TraderAmogh
Thanks for spending time on reading this post. Hope you gained little more insight on my Gap & Go Trading Strategy & why its my favorite setup to trade. See you in the streams.
TraderAmogh
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Your use of this website or information provided in this website, newsletters, or trade setups constitutes your informed consent and agreement with the terms of this Disclosure and any Terms of Service, Terms and Conditions, and Privacy Policies. If you do not agree to be bound by these terms, you must immediately cease using this website or any information provided in the website, Twitter, Discord, newsletter, or trade setups.
Any information contained in this website, newsletter(s), or trade setups is the personal and subjective view of Positive Trends Research LLC and given solely for informational and educational purposes and we do not intend, nor should you rely on it, as specific advice, or recommendations for any investment decisions. The only purpose of information provided in this website, newsletter, or trade setups is for general education about the financial industry.
We are NOT registered with the US Securities and Exchange Commission (“SEC”) or any state securities regulatory authority as a securities broker-dealer or investment adviser. We are not licensed to give investment advice. We do not give investment advice in any manner.
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