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Typically, traders attempt to use very small dollar risk stop losses for day trading; however, I do not necessarily agree with this when it comes to such volatile markets as the currencies and S&P futures. My research has shown that larger stops are preferable. Unfortunately, this does not sit well with many traders who have limited amounts of capital to risk.

I have found, for example, that a stop loss of as much as $2500 in S&P futures (500 points) is preferable to a stop loss of $500 or 100 points. Unfortunately, it is a sad but true fact that speculators have limited capital. Yet, the other side of the coin is that the larger your intraday stop loss, the greater the probability that you will remain in the trade and exit it profitably by the end of the day.

This is what my intensive research has confirmed. Gap Up Sell Signal. Opening price gaps to the upside provide opportunities to sell the market short for a day trade. The procedure here is the inverse of the lower opening price gap which is used for buying.

1. In the event of an opening price gap up, the first condition for a possible sell signal will be established.

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