Guide to Day Trading Strategies

H O W T O D A Y T R A D E
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Chart of a Gap Fill. Once the price gets into the gap we have breakout potential.
Gaps
If you look at almost any chart, you will see gaps. These are the days where the stock opened 
much higher or lower than the previous trading day. Gap days are caused by some type of 
fundamental catalyst such as earnings, a press release or some other big piece of news. We know 
that we will usually be trading stocks on the gap days, but it is also important to understand 
how those large gaps can be traded in the future. When a stock has a big gap, there is a large 
window on the chart and those windows will typically get 
À
lled. Gap 
À
ll occurs when the price 
of a stock moves into a gap window present on the chart. The original gap that created the 

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R O S S C A M E R O N
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window could have occurred in the last few days, months or even years. The window remains 
open and valid until the price action has closed it. Since we know there is no resistance inside the 
window, once a stock starts moving into the window, the gap often gets 
À
lled rather quickly. In 
contrast to the windows created by long body candles, windows created by gaps often get more 
buying attention. I believe this is a result of the gap window being more obvious to retail traders 
than long body candle windows. Since the market is comprised of many individual traders, 
our collective knowledge can become a factor in the success or failure of a pattern. A simple 
and obvious pattern will often result in cleaner and more decisive breakouts, because more 
traders see the opportunity. Complex patterns may only be noticeable to the most experienced 
traders, which will result in fewer traders buying at the critical breakout spot and therefore, less 
volume. For this reason, I am a big advocate of keeping it simple. I focus on trading the most 
obvious windows, triggers, and patterns, because they typically work the best. Trading becomes 
increasingly dif
À
cult when we over complicate it. When you are preparing to take a trade, try 
asking yourself if the setup is obvious. I have often found myself forcing trades, or trading 
obscure patterns out of boredom. Those trades rarely produce big winners and instead just rack 
up commission costs and distract me from better opportunities.