A losing one-and-done this morning made me realize we had overlooked a really important filter.
We typically don't want to do a long one-and-done on a stock that has gapped down. And vice versa. But while we had addressed the nuances of green candles with strong closes, we had somehow overlooked this most fundamental test. And it cost me $135 on AAPL today.
Here is a nice strong, green candle at 9:30 this morning. The problem is that it opened up $1.25 below where it closed yesterday. Pretty slimy, AAPL.
Fool me once, I've got a filter for next time. Fool me twice? I don't think so. That's $135 well-spent. :-)
So we added a filter that lets you stay out of long one-and-done's that gap down or short ones that gap up. And of course, it's optional and configurable. If you're willing to tolerate a small gap against you, you can do that. If you only want a strong gap in your favor, you can do that. If you don't want to filter based on gap at all, you can do that, too.
So you can continue to set up a bunch of trades and feel confident that you'll only enter the best opportunities based on your parameters.
Here are my results. AMD and NFLX filtered out. NVDA option spreads were too wide. AAPL snuck one past the goalie, but that won't happen again.
BTW, looking at AMD, NFLX, and NVDA, today was a day when we could have done very well if we were willing to accept a red opening candle. The longs would have worked out. They all gapped up nicely. Maybe I should try just looking for a close in the top half of the first candle on a gap up and not worry about where it is relative to the opening print.
What are your thoughts? How would you set up your one-and-done's? That is not a rhetorical question. I'd really like to know. (I'm a better coder than I am a trader. ;-)
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