Just a quick note here to let all the low float and gap traders out there know that I just updated the low float lists again as of this evening. I realized it was about time to release an update so I went ahead and put the elbow grease in :-). Moving forward, I have added a reminder to my work calendar to go in and update the lists every 2 months.
For those of you who have already purchased the low float stock scan, the new list installation links should be in your order detail page in your My Account > Orders area when you login to your account.
For anyone who’s interested in trading low floats in ThinkOrSwim but hasn’t figured out how to yet, here’s the main low float watch list page where you can learn more about our workaround.
Thanks for being awesome, and enjoy the rest of the week!
I want to be sure I’m providing a really good value for what I do, and that I respond to feedback from my customers. To that end, I spent a lot of time doing a complete overhaul of the pre-market gap scan set for the Stock Hacker scanner in ThinkOrSwim. To be clear, the old set of scans worked great, and I use modified versions of them all the time. But I wanted to make the scans even more powerful and full-featured so that they really do the best job they can possibly do. So today I’ve released the new version 2.0 gap scans, and EVERYONE who has purchased the scans in the past gets a free upgrade. You’ll notice the new links in your My Account > Orders > Order Details section automatically. Also, for those that haven’t purchased a copy yet, the scans are on sale this month here.
What’s New with the Pre-Market Gap Scan
First, there are a lot more of them, and all of them are more full-featured and easier to customize. They’re also more consistently setup, with cleaner code and comments.
Second, all the scans are set to find gaps greater than a certain percentage change, and you can now change that percentage to whatever you want for all of the scans!
Third, you’ll notice some new scans in both the pre-market group and the regular hours group. In the pre-market gap scan group, I’ve included a set of scans that finds what I call “insignificant” gaps, or gaps from the close, not from the high or low. Basically just a pre-market mover stock where there’s a gap between yesterday’s closing price and today’s opening price, even if that doesn’t take the open outside of yesterday’s range altogether.
Technically, a gap is any stock that OPENS higher than the previous day’s high, or lower than the previous day’s low. But if you run regular hours scans later in the day, the stocks might not all look like gaps because some of them have already filled the gap (i.e., even though a stock might have opened below yesterday’s low, today’s trading has moved the high so that it is now equal to or higher than the previous day’s low, for example, filling the a gap down). So one or two people got confused when my regular hours scans included these stocks that had later filled their gaps. I explained it to them, but I figured it would be even better to give everyone both options so you can weed out the ones that have already filled the gap, if you want to. So you’ll notice those scans below under “regular hours”.
All Version 2.0 Gap Scans Default to these Settings:
Last Price Between $5 – $200
Avg. Daily Volume > 500,000
Avg. True Range > .5
Gap >= 1%
All these settings can be adjusted and my comments inside the scan should help you do that if needed. Just use the drop-downs and input fields, or click the pencil icon next to any filter to change it. If you want to remove a filter altogether just click the X on the right hand side of the StockHacker window for that line of the scan. Be sure to save a new copy with a new name to apply the changes.
PRE-MARKET GAP SCAN – AFTER HOURS / EXTENDED HOURS SCANS
All Significant Gaps > X% From High Or Low
Significant Gaps Up > X% Above High
Significant Gaps Down > X% Below Low
All Tier 1 Significant Gaps > X% from High or Low
Tier 1 Significant Gaps Up > X% above High
Tier 1 Significant Gaps Down > X% below Low
All Gaps from Close (instead of hi/low) > X%
Gaps Down from Close (instead of low) > X%
Gaps Up from Close (instead of high) > X%
REGULAR TRADING HOURS SCANS
Gaps That Haven’t Filled Yet
All Significant Gaps (+ haven’t filled) > X%
Significant Gap Ups (+ haven’t filled) > X%
Significant Gap Downs (+ haven’t filled) > X%
All Tier 1 Gaps (+ haven’t filled) > X%
Tier 1 Gap Downs (+ haven’t filled) > X%
Tier 1 Gap Ups (+ haven’t filled) > X%
Gaps That May or May Not Have Filled
All Significant Gaps > X%
Significant Gap Ups > X%
Significant Gap Downs > X%
All Tier 1 Gaps > X%
Tier 1 Gap Downs > X%
Tier 1 Gap Ups > X%
I always refer to gaps in terms of either being insignificant, significant, or tier 1. That’s just how I learned to think about them, but to translate my “trader speak,” here’s a quick definition of each:
Insignificant: A gap from the close, where the open has moved > X% from yesterday’s CLOSE, but where the stock may or may not be opening outside of yesterday’s range altogether. These are basically just a good, cleaned up list of pre-market movers, and this is the broadest type of gap scan you can do.
Significant: A gap from the high or low, where the open has moved > X% from yesterday’s HIGH or LOW, and thus the stock is opening completely outside of yesterday’s range. These are “true” gaps.
Tier 1: A significant gap in the opposite direction of yesterday’s price movement. So if yesterday was a green up bar, today is a significant gap below the low of yesterday. Or if yesterday was a red down bar, then today is a significant gap up over yesterday’s high. Basically the gap is negating all price movement from yesterday and “shocking” traders who wake up and see their positions suddenly in the red. There is a greater likelihood to see some panicked covering of positions at and near the open, and especially at any early retrace toward yesterday’s price where trapped traders will try to get out nearer to break-even.
Low Float Stocks
Just a quick note here: I know a lot of pre-market gap scan users also trade low float stocks. Low float stocks that gap in the morning can often create a real spike in price movement a make a trader a lot of quick profit if they’re on the right side of that price movement. But trading these setups used to be next to impossible to do within ThinkOrSwim, so most people had to pay for a standalone scanning service like Trade Ideas at god-awful subscription rates.
However, recently I came up with a workaround that has been doing well for TOS traders — I’ve painstakingly created 5 custom static lists of stocks, with floats less than 10 million, 20, 30, 40, and 50 million shares float each, and I have posted those for sale over here.
And it gets better. All the gap scans can be set up to run only on the low float lists, thus only returning low float gapping stocks. So now if you purchase both products in the shop area, you can not only scan for normal gaps, but also for the low float gaps so many people are looking for ways to find now.
If you have any ideas for improvements to either the pre-market gap scan or the regular hours gap scan, I’m happy to hear them. Also, since this is a big release, I’m sure there might be a bug or two found during the first few weeks, so let me know if you spot anything weird.
Adrian Manz’s Gap Trading Strategy for ThinkOrSwim
This is a mean reversion gap trading strategy that is promoted by Dr. Adrian Manz of Trader Insight (see an example video by Manz here: https://www.youtube.com/watch?v=oudRj-Vcv0Q). A client of mine was interested in developing some tools to trade this strategy on ThinkOrSwim, and so I was able to work on this project and get several tools created to make it really easy. After looking into it more, I found the strategy to be pretty intriguing and very different from how I’ve traded gaps in the past, so I thought it might be worth my readers’ time to take a look at it. This is a complete set, which includes the strategy script itself, along with a custom scanner to find the gaps each day, and indicators and columns to help sort and evaluate the gaps.
What It Is
Scanner: helps you find stocks that are gapping way outside their normal bounds, increasing the probability of an immediate mean reversion move that you can fade.
Watchlist columns: these help you sort through and quickly analyze the best gap trading strategy candidates that are likely to have an immediate mean reversion.
Indicator: helps you find past and current entries on the chart and study how individual stocks perform and respond to this kind of gap trading strategy.
Strategy: Plots entries, exits, and (optionally) stops, on the chart (intraday charts only). The setups are based on the daily chart according to Adrian Manz’s rules, but the actual entries are done on whatever intraday timeframe you prefer to trade. The entry system is my own implementation of the gap trading strategy, which is to enter on the first intraday bar that is outside the standard deviation boundary and also outside of VWAP, and then it takes target once the price retreats back to VWAP. You can use this particular strategy if you like, or manage the trades on your own however you prefer. Adrian Manz uses a more price-action-based entry where he enters on a bar break in the direction of the fade, and takes targets based on support and resistance levels. However, S&R is very hard to code accurately, and I wanted to at least include one mechanical way of implementing the system, so the VWAP target makes sense on a mean reversion strategy like this. And this method seems to work well in my own tests.
Why You Want It
Trading is a game of probability and risk management. This strategy specifically addresses the probability issue, because there is always a reversion to the mean… statistically it’s just going to happen. This strategy helps you find the extreme conditions that are even more likely to result in an immediate mean reversion move.
How It Works
The scanner finds any stocks that meet the trading strategy’s criteria for being likely mean reversion candidates, and then the custom quote watchlist columns help you sort through them quickly and review the charts to see which ones you want to take a position on.
The indicator package helps you visually see previous setups that happened on your charts, as well as today’s signal, by plotting the unique standard deviation lines and signal arrows whenever an entry condition is triggered.