Posted 26 July 2007 - 03:13 PM
Actually, Jack Schwager (author of market wizards) mentions another rule that I have found useful in my trading.
You measure the particular day's gap in relation to other gaps in the same commodity, stock or stock index or to the average true range of price movement. Sounds complex but is quite simple. If the gap is larger than average, trade in its direction. Otherwise, fade it.