etf gap trading strategies that work
Last Updated on August 13, 2022 away
I tested three divergent ETFs to reply the call into question:
Arse you profitably trade wind chess opening gaps? And if so: what markets and factors addition your chances of big victorious trades?
To trade good you need to get the odds in your favor. Whether you are a day trader or swing trader this analytic thinking wish assistanc you make better trading decisions.
A lot of the results were ratification of what I unsurprising. But there were quite a few genuine surprises too.
Video Of Me Demonstrating
You can see eve more detail in the video downstairs. Watch me showing the different options, and display you how I did the analysis.
Some Primal Findings
- All Gaps are not equal – I set up that the all but productive Crack Up trades occurred aft the gap has winking. Whereas Gap Down it did not affair if the gap closed or not.
- Different markets need a different approach. There was a Brobdingnagian difference between trading the XLF and QQQ. QQQ gives good trades when the securities industry Gaps Up AND Gaps Down. XLF gives much better trades when the market has gapped up.
- Different outgoing conditions can increase your odds of a big winning trade. In many scenarios, you can gain the size of the average winning deal out by waiting for a downturn in the securities industry. I measured this by a count of the number of sequentially dispirited days.
- Longer material possession time usually way bigger winning trades. However, you motivation to piece your trades carefully to make convinced you hold onto the trades with the best potential.
- Longer holding multiplication as wel often way a higher percentage of winning trades. In most cases, you can increase your odds of a victorious trade by staying in the trade for a couple of years longer.
How I Tested
The test was carried out using a Tradinformed Backest Model.
The backtest models are built using Excel and you can use them to break out new-sprung strategies and better your trading.
What Did I Examine?
Every last the backtests tested long trades.
All the tests took trades exploitation either a limit or stop order. The first appearance conditions were checked at the close of the daytime after the gap. The social club was fit for the following day.
The backtest looked at Gaps Up and Gaps Down.
The backtest looked at different holding periods to see if that augmented the size of it of the winning trades.
XLF – Financial Pick out Sector
Winder Takeaways
- The XLF ETF performed practically better when the market gapped higher.
- Limit orders were more undefeated than stoppag orders.
XLF – Full Results
| Gap Type | Interruption Up | Breach Down | Interruption John L. H. Down | Gap Up | Gap Up | Gap Down |
|---|---|---|---|---|---|---|
| Order Case | Limit Order | Restrict Order | Cease Regulate | Point Order | Stop Order | Stop Plac |
| Holding Period | 1 24-hour interval | 1 day | 1 day | 1 twenty-four hours | 5 days | 5 day |
| Gross Winning Trades | $115,360 | $95,071 | $132,059 | $80,184 | $171,422 | $197,630 |
| Gross Losing Trades | $-70,644 | $-99,736 | $-123,850 | $-74,623 | $-128,370 | $-162,253 |
| Profits | $44,715 | $-4,665 | $8,209 | $5,561 | $43,051 | $35,377 |
| Turn a profit Factor | 1.63 | 0.95 | 1.07 | 1.07 | 1.34 | 1.22 |
| Winning Trades | 117 | 142 | 180 | 113 | 95 | 125 |
| Losing Trades | 72 | 129 | 159 | 90 | 62 | 90 |
| Percentage Winning Trades | 61.9% | 52.4% | 53.1% | 55.7% | 60.5% | 58.1% |
| Average Fetching Trade | 986 | 670 | 734 | 710 | 1,804 | 1,581 |
| Average Losing Trade | -981 | -773 | -779 | -829 | -2,070 | -1,803 |
| Largest Attractive Trade in | $4,407 | $3,255 | $4,461 | $3,072 | $7,542 | $7,027 |
| Largest Losing Trade | $-4,336 | $-4,342 | $-5,088 | $-3,670 | $-7,863 | $-7,550 |
| Date Range (years) | 9.47 | 9.47 | 946.8% | 946.8% | 9.47 | 946.8% |
| CAGR | 4.0% | -0.5% | 0.8% | 0.6% | 3.9% | 3.3% |
| Max Drawdown | 9.3% | 10.4% | 11.3% | 8.3% | 18.4% | 20.4% |
| MAR Ratio (CAGR/Max DD) | 42.7% | -4.8% | 7.4% | 6.9% | 20.9% | 15.9% |
| Average trade in expectancy (%) | 0.30% | 0% | 0% | 0% | 0.45% | 0% |
| Anticipation per measure | 0.30% | -0.01% | 0.03% | 0.06% | 0.09% | 0.05% |
QQQ – National Association of Securities Dealers Automated Quotations 100 Tracker
Keystone Takeaways
- The QQQ performed well in well-nig scenarios with halt and limit orders.
- You can growth the size of it of winning QQQ trades by material possession onto the trades for longer.
QQQ – Fully Results
| Gap Character | Gap Up | Gap Out | Col Down | Gap Up | Breach Sprouted | Spread Down |
|---|---|---|---|---|---|---|
| Order Type | Limit Range | Restrain Order | Stop-loss order | Stop-loss order | Stop Order | Finish Order |
| Holding Period | 1 day | 1 twenty-four hour period | 1 day | 1 mean solar day | 5 days | 5 day |
| Staring Winning Trades | $199,358 | $113,714 | $144,111 | $180,768 | $109,851 | $285,500 |
| Gross Losing Trades | $-126,884 | $-71,219 | $-118,329 | $-134,581 | $-83,300 | $-171,355 |
| Net Profit | $72,474 | $42,495 | $25,782 | $46,187 | $26,552 | $114,145 |
| Profit Factor out | 1.57 | 1.60 | 1.22 | 1.34 | 1.32 | 1.67 |
| Winning Trades | 102 | 125 | 164 | 199 | 140 | 144 |
| Losing Trades | 67 | 86 | 115 | 154 | 98 | 78 |
| Part Winning Trades | 60.4% | 59.2% | 58.8% | 56.4% | 58.8% | 64.9% |
| Average Winning Trade | 1,954 | 910 | 879 | 908 | 785 | 1,983 |
| Average Losing Barter | -1,894 | -828 | -1,029 | -874 | -850 | -2,197 |
| Largest Successful Swap | $6,580 | $2,583 | $4,623 | $4,968 | $3,137 | $7,748 |
| Largest Losing Trade | $-6,430 | $-3,234 | $-6,002 | $-3,660 | $-3,459 | $-9,234 |
| Date Range (years) | 9.47 | 9.47 | 9.47 | 946.8% | 946.8% | 946.8% |
| CAGR | 5.9% | 3.8% | 2.5% | 4.1% | 2.5% | 8.4% |
| Max Drawdown | 17.4% | 7.1% | 11.2% | 11.5% | 12.7% | 10.9% |
| MAR Ratio (CAGR/Max Doctor of Divinity) | 34.2% | 53.4% | 21.9% | 35.7% | 19.8% | 77.0% |
| Average trade expectancy (%) | 0.39% | 0.18% | 0.105% | 0.145% | 0.134% | 0.553% |
| Expectancy per bar | 0.08% | 0.18% | 0.10% | 0.14% | 0.13% | 0.11% |
SPY – Sdanamp;P 500 Tracker
Key Takeaways
- The SPY performed within reason wellspring in near scenarios.
- You can dramatically increase the size of average out winning trades by property the trade for yearner.
SPY – Full Results
| Gap Eccentric | Gap Leading | Opening Pile | Disruption Down | Gap Up | Gap Up | Gap Down |
|---|---|---|---|---|---|---|
| Order Typecast | Terminus ad quem Order | Limit Order | Stop Order | Stop Rescript | Stop-loss order | Stop Order |
| Holding Period | 1 day | 1 day | 1 day | 1 day | 5 days | 5 day |
| Gross Winning Trades | $196,264 | $99,042 | $151,830 | $199,263 | $98,037 | $341,820 |
| Utter Losing Trades | $-138,399 | $-70,516 | $-133,510 | $-154,152 | $-88,795 | $-192,888 |
| Profits | $57,865 | $28,525 | $18,320 | $45,111 | $9,242 | $148,932 |
| Profit Divisor | 1.42 | 1.40 | 1.14 | 1.29 | 1.10 | 1.77 |
| Winning Trades | 95 | 103 | 170 | 218 | 119 | 162 |
| Losing Trades | 66 | 76 | 134 | 175 | 96 | 78 |
| Percentage Winning Trades | 59.0% | 57.5% | 55.9% | 55.5% | 55.3% | 67.5% |
| Average Winning Merchandise | 2,066 | 962 | 893 | 914 | 824 | 2,110 |
| Average Losing Trade | -2,097 | -928 | -996 | -881 | -925 | -2,473 |
| Largest Winning Trade | $7,517 | $2,430 | $4,103 | $6,138 | $2,532 | $8,027 |
| Largest Losing Trade | $-8,658 | $-3,755 | $-7,091 | $-3,546 | $-3,770 | $-12,689 |
| Date Mountain range (years) | 9.47 | 9.47 | 946.8% | 946.8% | 946.8% | 946.8% |
| CAGR | 4.9% | 2.7% | 1.8% | 4.0% | 0.9% | 10.1% |
| Max Drawdown | 13.1% | 4.8% | 17.5% | 11.9% | 8.6% | 8.4% |
| Blemish Ratio (CAGR/Max Doctor of Divinity) | 37.8% | 55.4% | 10.2% | 33.8% | 11.0% | 119.8% |
| Average trade expectancy (%) | 0.25% | 0.15% | 0.06% | 0.11% | 0.05% | 0.51% |
| Expectancy per bar | 0.05% | 0.15% | 0.06% | 0.11% | 0.05% | 0.10% |
Mark Ursell
etf gap trading strategies that work
Source: https://www.tradinformed.com/profitable-etf-gap-trading-strategies/
Posted by: robinsonextrahmethe.blogspot.com
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