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Interpreting some of Dr. Brooks' slides that discuss gaps.
My question: how big must a gap be to qualify as 'big'? I assume it should be expressed as a percentage, since daily range has expended over time. So what % gap should be thought of as big?
Interpreting some of Dr. Brooks' slides that discuss gaps.
My question: how big must a gap be to qualify as 'big'? I assume it should be expressed as a percentage, since daily range has expended over time. So what % gap should be thought of as big?
Hi Wesley,
I don't remember Al ever quantifying big gap size. Using ~1/2 daily ATR may be reasonable. Such gaps often lead to trends. However, if a gap is too big (> daily ATR) the day is more likely to end up as TRD.
Exploring gaps is definitely something a trader can do for themselves. Over at Telegram chat our bot supports finding gaps of specific size in the ES just for this purpose. So if you want to do a study on this it may help you.
Hope that helped.
Cheers,
CH
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Thanks - ATR is a good idea. He references big gaps in his encyclopedia slides - e.g. slide 2.2 in section 5.
