Guide to Day Trading Strategies

the trend. On the 
À
 ve minute chart, this was forming a bull 
Á
 ag.

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R O S S C A M E R O N
90
Gap and Go - Buying the 
À
 rst pullback
Sometimes there will be a great Gap and Go trade, and you will miss the 
À
rst entry on the pre-
market 
Á
ag breakout or the one minute ORB. In these cases, or in the case where I simply did 
not have that gapper on close watch, I look to get in on the 
À
rst pullback. The 
À
rst pullback 
must take the form of either a traditional bull 
Á
ag, 
Á
at top breakout or 9 EMA pullback. Buying 
the 
À
rst pullback is probably the most conservative way to trade Gap and Go stocks, because it 
does not require you to take a trade in the 
À
rst two to three minutes of the market open. I can 
be very pro
À
table trading at the open, but for beginner traders, it can be too volatile and too 
risky. Beginner traders may 
À
nd it easier to trade the 
À
rst pullback on gapping stocks. The best 
Gap and Go stocks will break out of the 
À
rst and second pullbacks.
Chart of Red to Green Move. Price went red on the day versus the open price, then 
surged back up. The 
À
 rst entry was the 
À
 rst 
À
 ve minute candle to make a new 
high. This stock was so strong it setup for a second entry on a bull 
Á
 ag pattern.

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H O W T O D A Y T R A D E
91
Gap and Go - Red to Green
There are times when a beautiful Gap and Go candidate opens and sells off hard right out of 
the gates. These stocks may be unable to break the top of the pre-market 
Á
ag or may open in 
between support and resistance and experience a quick sell off at the open. Regardless of the 
reason, the only potential setup left for these Gap and Go stocks is the Red to Green move. A 
Red to Green move is when the price of the stock drops below the open price and then surges 
back through the open price. This has the effect of making the stock go from red on the day 
to green on the day, versus the open price. Despite the early sign of weakness, Red to Green 
moves can be powerful, because anyone that decided to short the stock on weakness at the 
open will most likely cover as it breaks through the open price. The added buying volume of 
shorts covering and long biased traders getting in, can create an explosive breakout. The biggest 
risk with this setup is that the stock has already shown a tendency for weakness and it could be 
quickly overpowered by sellers again. I enter a Red to Green move on the 
À
rst candle to make a 
new high after the washout. This trade can be taken on either the one minute or the 
À
ve minute 
chart. Once I am in the trade, I will immediately set a mental stop at the low of day, and look 
to sell half my position as soon as I have made what I was risking. Once I have sold half, I will 
adjust my stop to breakeven and hold the position as long as possible. On strong Red to Green 
moves, we will have opportunities to trade the 
À
rst pullback after the breakout, and possibly 
the break of pre-market highs. If I buy a Red to Green setup, and it immediately goes back to 
red on the day, I will sell for a loss. I consider that an immediate exit indicator and in general, 
weakness in the stock.