Anyone up for a challenge?


I came across an interesting trading theory today, from this video:

His theory in a nutshell is that if a large gap up in price and volume takes place in one candlestick, then the length of the gapping candlestick will probably offer an area of support in the event of a pullback. This is a reversal strategy, which he describes as buying the dip. The dip in this case is a return to the area where a gap-up took place. (The theory should work on any level, but he used the 2Day-2Minute time frame in the video).

The big question is whether and how this simple trading strategy can be transformed into a TOS study, ideally with buy signals so that the scanner can pick up on them. Anyone up for the challenge?
@Batman I've actually employed an alternate methodology... When an asset shows a rapid rise, such as HOOD has, I'm more apt to watch for a reversal and ride it down to midway between the high and where the rise originated from... But, then again, I have more of a scalping mindset... If the price returns to the original level I'd be selling any remaining positions that weren't sold at midpoint or preparing to ride the next upward movement... Another option would be to average down during the pullback in anticipation of a new upward rebound... Different strokes for different folks... It all comes down to knowing an asset intimately rather than merely watching the entire market and jumping in and out of assets blindly based on hunches or boilerplate patterns...

Join useThinkScript to post your question to a community of 21,000+ developers and traders.

Similar threads

Not the exact question you're looking for?

Start a new thread and receive assistance from our community.

87k+ Posts
379 Online
Create Post

Similar threads

Similar threads

The Market Trading Game Changer

Join 2,500+ subscribers inside the useThinkScript VIP Membership Club
  • Exclusive indicators
  • Proven strategies & setups
  • Private Discord community
  • ‘Buy The Dip’ signal alerts
  • Exclusive members-only content
  • Add-ons and resources
  • 1 full year of unlimited support

Frequently Asked Questions

What is useThinkScript?

useThinkScript is the #1 community of stock market investors using indicators and other tools to power their trading strategies. Traders of all skill levels use our forums to learn about scripting and indicators, help each other, and discover new ways to gain an edge in the markets.

How do I get started?

We get it. Our forum can be intimidating, if not overwhelming. With thousands of topics, tens of thousands of posts, our community has created an incredibly deep knowledge base for stock traders. No one can ever exhaust every resource provided on our site.

If you are new, or just looking for guidance, here are some helpful links to get you started.

What are the benefits of VIP Membership?
VIP members get exclusive access to these proven and tested premium indicators: Buy the Dip, Advanced Market Moves 2.0, Take Profit, and Volatility Trading Range. In addition, VIP members get access to over 50 VIP-only custom indicators, add-ons, and strategies, private VIP-only forums, private Discord channel to discuss trades and strategies in real-time, customer support, trade alerts, and much more. Learn all about VIP membership here.
How can I access the premium indicators?
To access the premium indicators, which are plug and play ready, sign up for VIP membership here.