Master Trader Guidelines for Trading the Open, Gaps and Targets

Triggers at Market Open

Never trade in first five (5) minutes after market open (this includes entering new trades or taking stops).  Thereafter, use a 5-Min. high for bullish positions (5-Min. low for bearish positions) as the revised entry point provided the security has not moved over 10% of its intended Target.

For stops which trigger within the first five (5) minutes, use a 5-Min. low for bullish positions, and a 5-Min. high for bearish positions.

Guidelines if Entry/Exit Levels Triggered on Gap

  • New Trades – For Gaps of less than 1%, apply rules above at Triggers at Market Open, or can try to get price improvement on a retracement.
  • Open Trades – For Gaps exceeding the posted Stop Loss, use a 30-Min. low for bullish positions, and a 30-Min. high for bearish positions

 

Guidelines on Stock (and Directional Option Trade) Targets

If your position quickly delivers a relatively quick 50% of Max Gain (as measured by its Target, or 50% of Net Credit if selling options).  Then move stop to break even.  This eliminates some of the market risk, books some realized profit, and still leaves some open to generate more profit.

If your position begins to “accelerate in the intended direction” (i.e., bullish up, bearish down), tighten stops and go into a trail-mode to close into that strength or weakness even if the Target has not been met precisely.

 

Guidelines on Selling Options

See Money Management Considerations When Selling Option Credit Spreads for Income document in Member’s Area for this discussion.

 

How Long Are Trade Recommendations Valid

Triggers on new trades shall remain valid for three days provided (a) we don’t cancel the trade, or (b) it violates its Stop Loss before triggering.