CFA Level II Review - Level 2 Weekend Marathon

In such cases, the market will need to make a considerable move up in the case of a gap lower opening, or down in the case of a gap higher opening, before it can trigger entry on the first gap method (GO) I have just described. By the time this occurs, a great deal of the day's potential profit may have passed you by.

In order to deal with this situation, I have developed the delayed gap open method (DGO) which is designed to provide entry more quickly, and which may be used in conjunction with the first gap method I discussed, thereby resulting in two possible entry signals on any given day.

Here's how the method works. Delayed Gap Down Buy Signal 1. Gap lower opening. In the event of a gap lower opening, you will place a buy stop two ticks above the low of the previous day.

This is similar to the basic GO method. 2. If at the end of the first hour of trading the buy stop has not been elected, in other words if the market has not triggered you on the long side, you will examine the current price in relation to the current day's opening price. If the current price is higher than the opening price by two ticks after the end of the first hour of trading, you will enter the long position at market.

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