SlideShare a Scribd company logo

Bars

1 of 13
Download to read offline
Trading Triggers - Part 1
REVERSAL BARS

Reversal bars are an objective technique used to time the entry of a trade. When pattern, price and time all
come together at a suspected major pivot, and you hesitate while wondering if the prior trend will continue
against your new position, a reversal bar can be the objective trigger to prompt you to take action. The
examples demonstrated below have many variations. The example given is not the only possible
configuration for that reversal bar type. The important concept is that with every configuration, prices make
a new high (or low) but close opposite the direction of the open and the trend. The reversal bar is telling you
that the trend for that time frame has run out of gas and that no new buyers or sellers are coming into the
market. For bullish reversals just substitute low for high.

Not every reversal bar is significant. This is especially true for intraday charts. Reversal bars take on
importance when they occur at a coincidence of pattern, price and time.

  •    Reversal Bar - Makes higher High and
       closes below Today's Open and
       Yesterday's Close




  •    Key Reversal Bar - Opens below prior
       bar close, makes new High. Closes
       below prior Close and Today's Open.
Outside Key Reversal Bar - Opens below
prior bar close, makes new High. Closes
below prior Close and Today's Open.




Signal Bar - Opens above prior Close, makes
new High. Closes below Today's Open
Gap Signal Bar - Opens above prior
Close, makes new High. Closes below
Today's Open but Gap is not filled.




Snap Back Reversal Bar - Day 1 makes
new High, opens bottom 1/3 of the bar,
closes top 1/3. Day 2 opens top 1/3 of the
bar, closes bottom 1/3, does not have to
make new High.
Reversal Confirmation - First day that
Close is below Open. Better signal if it
makes lower Low.
Trading Triggers - Part 2
CONTINUATION BARS

Not every major pivot point is marked by a reversal bar. Continuation set-ups can still get you in a trade
relatively close to the pivot point. Continuation bars are easily identified on a bar or candlestick chart. They
always start with either an inside bar or an outside bar.

Inside Bar - Today's high and low do not exceed yesterday's high and low.

Outside Bar - Today's high and low both exceed yesterday's high and low.




Inside Bar




                                                   Outside Bar
Outside Plus Bar




STOP LOSSES

Losses are part and parcel of trading. Successful traders learn to manage their losses, or shortly find
something else to occupy their time.

Trade entries are relatively easy. You have an objective set of criteria and when those conditions are met you
enter the trade. Stop losses are more difficult because now you are in the trade. The cool hand that pulled
the trigger to enter is now firmly wedged between the rock of fear and the hard place of greed.

Just a few ideas for objective stop loss points. There are many more.

Pattern stops occur when price moves to an extreme that negates the working Elliott Wave scenario. For
example, a Wave 2 entry is stopped out if prices violate the pivot price that initiated the swing (Wave Zero).
All the pattern stops that we use are set out in the Trading Signals section.

Robert Miner, a successful trader and teacher, posits that three, two and one day bar extremes are logical
stops. For example, for a long trade that is in the early stages of a Wave 3, the lowest low of the most recent
three daily bars (including today) is an objective stop loss point. As Wave 3 progresses into its later stages
the stop is moved to two bars or even to one bar. Miner does not count inside bars when computing the
extremes.

Another method presented by Williams that ties into Miner's one day stop is the Zone Stop. When price bars
have run for five consecutive bars in the same zone (shown as five consecutive red or green bars) place a one
day stop and move it every day until it gets hit.

The important concept is to let the market, not your emotions, take you out of the trade - with a profit if the
trade works out for you, and with a manageable loss if it does not. You don't know what the market is going
to do next. Don't anticipate. You'll experience a lot less stress and probably make more money too.

Recommended

Top 8 Forex Trading Strategies That Pro Traders Use
Top 8 Forex Trading Strategies That Pro Traders UseTop 8 Forex Trading Strategies That Pro Traders Use
Top 8 Forex Trading Strategies That Pro Traders UseSyrous Pejman
 
High Probability Trading Setups
High Probability Trading SetupsHigh Probability Trading Setups
High Probability Trading Setupsbtrader
 
How to Become a Professional Trader
How to Become a Professional TraderHow to Become a Professional Trader
How to Become a Professional Trader My Trading Skills
 
SMC structure.pptx
SMC structure.pptxSMC structure.pptx
SMC structure.pptxTan Ngoc
 
40 pip parabolic sar forex strategy (1)
40 pip parabolic sar forex strategy (1)40 pip parabolic sar forex strategy (1)
40 pip parabolic sar forex strategy (1)pipsumo traderfx
 
ORDER BLOCK ENTRY.pptx
ORDER BLOCK ENTRY.pptxORDER BLOCK ENTRY.pptx
ORDER BLOCK ENTRY.pptxTan Ngoc
 
The simple scalping strategy rules
The simple scalping strategy rules  The simple scalping strategy rules
The simple scalping strategy rules Nasir Tareen
 

More Related Content

What's hot

FOREX SCALPING STRATEGY
FOREX SCALPING STRATEGYFOREX SCALPING STRATEGY
FOREX SCALPING STRATEGYOptionsTekkers
 
Follow the Money and short names.pdf
Follow the Money and short names.pdfFollow the Money and short names.pdf
Follow the Money and short names.pdfHungLe593957
 
Simple scalping secret strategy
Simple scalping secret strategySimple scalping secret strategy
Simple scalping secret strategyHeri Valiant
 
The power to predict basics and advanced forex analysis
The power to predict   basics and advanced forex analysisThe power to predict   basics and advanced forex analysis
The power to predict basics and advanced forex analysisPower Point
 
Magic Breakout Forex Trading Strategy PDF eBook
Magic Breakout Forex Trading Strategy PDF eBookMagic Breakout Forex Trading Strategy PDF eBook
Magic Breakout Forex Trading Strategy PDF eBookeforexcourse web
 
What are Key Chart Levels and How to Trade Them
What are Key Chart Levels and How to Trade ThemWhat are Key Chart Levels and How to Trade Them
What are Key Chart Levels and How to Trade Them My Trading Skills
 
Forex Trading - How to Create a Trading Strategy
Forex Trading - How to Create a Trading StrategyForex Trading - How to Create a Trading Strategy
Forex Trading - How to Create a Trading StrategyBlueMax Capital
 
All you need to know.pdf
All you need to know.pdfAll you need to know.pdf
All you need to know.pdfHungLe593957
 
Best Swing Trading Indicators and Oscillators
Best Swing Trading Indicators and OscillatorsBest Swing Trading Indicators and Oscillators
Best Swing Trading Indicators and OscillatorsSwingTradingBootCamp
 
Understanding Japanese Candlesticks in Forex Trading by valentino heavens
Understanding Japanese Candlesticks in Forex Trading by valentino heavensUnderstanding Japanese Candlesticks in Forex Trading by valentino heavens
Understanding Japanese Candlesticks in Forex Trading by valentino heavensValentino Heavens
 
LC's Forex Trading System
LC's Forex Trading SystemLC's Forex Trading System
LC's Forex Trading Systemlcchong76
 
Top 8 Forex Trading Strategies
Top 8 Forex Trading StrategiesTop 8 Forex Trading Strategies
Top 8 Forex Trading StrategiesSyrous Pejman
 
Master trend-following
Master trend-followingMaster trend-following
Master trend-followingVarlei Rezer
 
RSTARFX VIP HANDBOOK.pdf
RSTARFX VIP HANDBOOK.pdfRSTARFX VIP HANDBOOK.pdf
RSTARFX VIP HANDBOOK.pdfVictorRolland3
 
Scalping in Day Trading
Scalping in Day TradingScalping in Day Trading
Scalping in Day TradingInvestingTips
 
Secrets of Price Action Trading
Secrets of Price Action TradingSecrets of Price Action Trading
Secrets of Price Action TradingSyrous Pejman
 
Learn A Simple Range Trading Strategy
Learn A Simple Range Trading StrategyLearn A Simple Range Trading Strategy
Learn A Simple Range Trading StrategyNetpicksTrading
 
4 hour macd forex strategy
4 hour macd forex strategy4 hour macd forex strategy
4 hour macd forex strategyErnani Dias
 

What's hot (20)

FOREX SCALPING STRATEGY
FOREX SCALPING STRATEGYFOREX SCALPING STRATEGY
FOREX SCALPING STRATEGY
 
Follow the Money and short names.pdf
Follow the Money and short names.pdfFollow the Money and short names.pdf
Follow the Money and short names.pdf
 
Simple scalping secret strategy
Simple scalping secret strategySimple scalping secret strategy
Simple scalping secret strategy
 
The power to predict basics and advanced forex analysis
The power to predict   basics and advanced forex analysisThe power to predict   basics and advanced forex analysis
The power to predict basics and advanced forex analysis
 
Magic Breakout Forex Trading Strategy PDF eBook
Magic Breakout Forex Trading Strategy PDF eBookMagic Breakout Forex Trading Strategy PDF eBook
Magic Breakout Forex Trading Strategy PDF eBook
 
What are Key Chart Levels and How to Trade Them
What are Key Chart Levels and How to Trade ThemWhat are Key Chart Levels and How to Trade Them
What are Key Chart Levels and How to Trade Them
 
Forex Trading - How to Create a Trading Strategy
Forex Trading - How to Create a Trading StrategyForex Trading - How to Create a Trading Strategy
Forex Trading - How to Create a Trading Strategy
 
All you need to know.pdf
All you need to know.pdfAll you need to know.pdf
All you need to know.pdf
 
Best Swing Trading Indicators and Oscillators
Best Swing Trading Indicators and OscillatorsBest Swing Trading Indicators and Oscillators
Best Swing Trading Indicators and Oscillators
 
Understanding Japanese Candlesticks in Forex Trading by valentino heavens
Understanding Japanese Candlesticks in Forex Trading by valentino heavensUnderstanding Japanese Candlesticks in Forex Trading by valentino heavens
Understanding Japanese Candlesticks in Forex Trading by valentino heavens
 
LC's Forex Trading System
LC's Forex Trading SystemLC's Forex Trading System
LC's Forex Trading System
 
Top 8 Forex Trading Strategies
Top 8 Forex Trading StrategiesTop 8 Forex Trading Strategies
Top 8 Forex Trading Strategies
 
Master trend-following
Master trend-followingMaster trend-following
Master trend-following
 
RSTARFX VIP HANDBOOK.pdf
RSTARFX VIP HANDBOOK.pdfRSTARFX VIP HANDBOOK.pdf
RSTARFX VIP HANDBOOK.pdf
 
Scalping in Day Trading
Scalping in Day TradingScalping in Day Trading
Scalping in Day Trading
 
The Technical Analysis Guidebook
The Technical Analysis GuidebookThe Technical Analysis Guidebook
The Technical Analysis Guidebook
 
Secrets of Price Action Trading
Secrets of Price Action TradingSecrets of Price Action Trading
Secrets of Price Action Trading
 
Forex trading strategies
Forex trading strategiesForex trading strategies
Forex trading strategies
 
Learn A Simple Range Trading Strategy
Learn A Simple Range Trading StrategyLearn A Simple Range Trading Strategy
Learn A Simple Range Trading Strategy
 
4 hour macd forex strategy
4 hour macd forex strategy4 hour macd forex strategy
4 hour macd forex strategy
 

Viewers also liked

Top 5 issues niagara niagara business club - 2015
Top 5 issues niagara   niagara business club - 2015Top 5 issues niagara   niagara business club - 2015
Top 5 issues niagara niagara business club - 2015Neil Thornton HBA, MA
 
Presentació del Departament de Desenvolupament i Ocupació
Presentació del Departament de Desenvolupament i OcupacióPresentació del Departament de Desenvolupament i Ocupació
Presentació del Departament de Desenvolupament i OcupacióAjuntament Igualada
 
Product And Investment Training
Product And Investment TrainingProduct And Investment Training
Product And Investment TrainingKristina Flores
 
Marketing Your Small Business With LinkedIn
Marketing Your Small Business With LinkedInMarketing Your Small Business With LinkedIn
Marketing Your Small Business With LinkedInChristopher T. Lawson
 
Egitim direktor aday_sonuclandirma
Egitim direktor aday_sonuclandirmaEgitim direktor aday_sonuclandirma
Egitim direktor aday_sonuclandirmaerdsah
 

Viewers also liked (20)

25 years of notable disasters in mexico 1985 2010 lessons learned for prepare...
25 years of notable disasters in mexico 1985 2010 lessons learned for prepare...25 years of notable disasters in mexico 1985 2010 lessons learned for prepare...
25 years of notable disasters in mexico 1985 2010 lessons learned for prepare...
 
Deadly Professions: Violent Attacks Against Aid-Workers and the Health Impli...
 Deadly Professions: Violent Attacks Against Aid-Workers and the Health Impli... Deadly Professions: Violent Attacks Against Aid-Workers and the Health Impli...
Deadly Professions: Violent Attacks Against Aid-Workers and the Health Impli...
 
Top 5 issues niagara niagara business club - 2015
Top 5 issues niagara   niagara business club - 2015Top 5 issues niagara   niagara business club - 2015
Top 5 issues niagara niagara business club - 2015
 
Presentació del Departament de Desenvolupament i Ocupació
Presentació del Departament de Desenvolupament i OcupacióPresentació del Departament de Desenvolupament i Ocupació
Presentació del Departament de Desenvolupament i Ocupació
 
Product And Investment Training
Product And Investment TrainingProduct And Investment Training
Product And Investment Training
 
Saving And Investing
Saving And InvestingSaving And Investing
Saving And Investing
 
U S A
U S AU S A
U S A
 
Update On Post-Sandy Response And Recovery Issues
Update On Post-Sandy Response And Recovery IssuesUpdate On Post-Sandy Response And Recovery Issues
Update On Post-Sandy Response And Recovery Issues
 
Health and foreign policy in question: the case of humanitarian action
Health and foreign policy in question: the case of  humanitarian actionHealth and foreign policy in question: the case of  humanitarian action
Health and foreign policy in question: the case of humanitarian action
 
Esport
EsportEsport
Esport
 
積算ソフト資料
積算ソフト資料積算ソフト資料
積算ソフト資料
 
Presentació xavier
Presentació xavierPresentació xavier
Presentació xavier
 
Navigator Slideshow
Navigator SlideshowNavigator Slideshow
Navigator Slideshow
 
Bibliografia hiver 2016
Bibliografia hiver 2016Bibliografia hiver 2016
Bibliografia hiver 2016
 
Our legacy and global climate change: Part I
Our legacy and global climate change: Part IOur legacy and global climate change: Part I
Our legacy and global climate change: Part I
 
Marketing Your Small Business With LinkedIn
Marketing Your Small Business With LinkedInMarketing Your Small Business With LinkedIn
Marketing Your Small Business With LinkedIn
 
Facebook lal
Facebook lalFacebook lal
Facebook lal
 
Egitim direktor aday_sonuclandirma
Egitim direktor aday_sonuclandirmaEgitim direktor aday_sonuclandirma
Egitim direktor aday_sonuclandirma
 
Catastrophic Disasters in China PART II
Catastrophic Disasters in China PART IICatastrophic Disasters in China PART II
Catastrophic Disasters in China PART II
 
Adv Or 13902 Chap3 Integer Programming
Adv Or 13902 Chap3 Integer ProgrammingAdv Or 13902 Chap3 Integer Programming
Adv Or 13902 Chap3 Integer Programming
 

Similar to Bars

Trade Plan.pdf
Trade Plan.pdfTrade Plan.pdf
Trade Plan.pdfduytinhvl
 
Potential trading setups scan
Potential trading setups scanPotential trading setups scan
Potential trading setups scanNetpicksTrading
 
Chart patterns final handout
Chart patterns   final handoutChart patterns   final handout
Chart patterns final handoutwijitha gayan
 
Manuscript on Trading
Manuscript on TradingManuscript on Trading
Manuscript on TradingDavid Knight
 
Elliott Waves Strategies
Elliott Waves StrategiesElliott Waves Strategies
Elliott Waves StrategiesBoris Fesenko
 
Four pillars webinar
Four pillars webinarFour pillars webinar
Four pillars webinareminiaddict
 
Equitimax - Pivot Breaker
Equitimax - Pivot BreakerEquitimax - Pivot Breaker
Equitimax - Pivot BreakerEquitimax
 
GuidetoPlacingGoodStops
GuidetoPlacingGoodStopsGuidetoPlacingGoodStops
GuidetoPlacingGoodStopsAdam Mesh
 
Forex bermuda trading strategy system
Forex bermuda trading strategy systemForex bermuda trading strategy system
Forex bermuda trading strategy systemMichael Selim
 
Profit from trapped traders with 2 simple setups
Profit from trapped traders with 2 simple setupsProfit from trapped traders with 2 simple setups
Profit from trapped traders with 2 simple setupsNetpicksTrading
 
Profit From Pullback Trading
Profit From Pullback TradingProfit From Pullback Trading
Profit From Pullback TradingNetpicksTrading
 
Opening range breakout trading strategy
Opening range breakout trading strategyOpening range breakout trading strategy
Opening range breakout trading strategyNasir Tareen
 
Question Your Trading Rules
Question Your Trading RulesQuestion Your Trading Rules
Question Your Trading RulesNetpicksTrading
 
Trading The Cloud – Part Three
Trading The Cloud – Part ThreeTrading The Cloud – Part Three
Trading The Cloud – Part ThreeChris Nice
 
5_6082370085723309457.pptx
5_6082370085723309457.pptx5_6082370085723309457.pptx
5_6082370085723309457.pptxshiva prakasam
 
5 steps to make profits in forex trading using day trading strategy
5 steps to make profits in forex trading using day trading strategy5 steps to make profits in forex trading using day trading strategy
5 steps to make profits in forex trading using day trading strategyIftekhar Ahmed
 
Trend Trend day - Trend PB - TSLA - 3-1-23.pptx
Trend Trend day - Trend PB - TSLA - 3-1-23.pptxTrend Trend day - Trend PB - TSLA - 3-1-23.pptx
Trend Trend day - Trend PB - TSLA - 3-1-23.pptxMaartenvanBemmel3
 

Similar to Bars (20)

Trade Plan.pdf
Trade Plan.pdfTrade Plan.pdf
Trade Plan.pdf
 
Potential trading setups scan
Potential trading setups scanPotential trading setups scan
Potential trading setups scan
 
Chart patterns final handout
Chart patterns   final handoutChart patterns   final handout
Chart patterns final handout
 
Manuscript on Trading
Manuscript on TradingManuscript on Trading
Manuscript on Trading
 
Elliott Waves Strategies
Elliott Waves StrategiesElliott Waves Strategies
Elliott Waves Strategies
 
Four pillars webinar
Four pillars webinarFour pillars webinar
Four pillars webinar
 
Equitimax - Pivot Breaker
Equitimax - Pivot BreakerEquitimax - Pivot Breaker
Equitimax - Pivot Breaker
 
Powerband
PowerbandPowerband
Powerband
 
Core Master Trading Strategies
Core Master Trading StrategiesCore Master Trading Strategies
Core Master Trading Strategies
 
GuidetoPlacingGoodStops
GuidetoPlacingGoodStopsGuidetoPlacingGoodStops
GuidetoPlacingGoodStops
 
Forex bermuda trading strategy system
Forex bermuda trading strategy systemForex bermuda trading strategy system
Forex bermuda trading strategy system
 
Profit from trapped traders with 2 simple setups
Profit from trapped traders with 2 simple setupsProfit from trapped traders with 2 simple setups
Profit from trapped traders with 2 simple setups
 
Profit From Pullback Trading
Profit From Pullback TradingProfit From Pullback Trading
Profit From Pullback Trading
 
Opening range breakout trading strategy
Opening range breakout trading strategyOpening range breakout trading strategy
Opening range breakout trading strategy
 
Question Your Trading Rules
Question Your Trading RulesQuestion Your Trading Rules
Question Your Trading Rules
 
Trading The Cloud – Part Three
Trading The Cloud – Part ThreeTrading The Cloud – Part Three
Trading The Cloud – Part Three
 
5_6082370085723309457.pptx
5_6082370085723309457.pptx5_6082370085723309457.pptx
5_6082370085723309457.pptx
 
Binary options 2015
Binary options 2015Binary options 2015
Binary options 2015
 
5 steps to make profits in forex trading using day trading strategy
5 steps to make profits in forex trading using day trading strategy5 steps to make profits in forex trading using day trading strategy
5 steps to make profits in forex trading using day trading strategy
 
Trend Trend day - Trend PB - TSLA - 3-1-23.pptx
Trend Trend day - Trend PB - TSLA - 3-1-23.pptxTrend Trend day - Trend PB - TSLA - 3-1-23.pptx
Trend Trend day - Trend PB - TSLA - 3-1-23.pptx
 

Bars

  • 1. Trading Triggers - Part 1 REVERSAL BARS Reversal bars are an objective technique used to time the entry of a trade. When pattern, price and time all come together at a suspected major pivot, and you hesitate while wondering if the prior trend will continue against your new position, a reversal bar can be the objective trigger to prompt you to take action. The examples demonstrated below have many variations. The example given is not the only possible configuration for that reversal bar type. The important concept is that with every configuration, prices make a new high (or low) but close opposite the direction of the open and the trend. The reversal bar is telling you that the trend for that time frame has run out of gas and that no new buyers or sellers are coming into the market. For bullish reversals just substitute low for high. Not every reversal bar is significant. This is especially true for intraday charts. Reversal bars take on importance when they occur at a coincidence of pattern, price and time. • Reversal Bar - Makes higher High and closes below Today's Open and Yesterday's Close • Key Reversal Bar - Opens below prior bar close, makes new High. Closes below prior Close and Today's Open.
  • 2. Outside Key Reversal Bar - Opens below prior bar close, makes new High. Closes below prior Close and Today's Open. Signal Bar - Opens above prior Close, makes new High. Closes below Today's Open
  • 3. Gap Signal Bar - Opens above prior Close, makes new High. Closes below Today's Open but Gap is not filled. Snap Back Reversal Bar - Day 1 makes new High, opens bottom 1/3 of the bar, closes top 1/3. Day 2 opens top 1/3 of the bar, closes bottom 1/3, does not have to make new High.
  • 4. Reversal Confirmation - First day that Close is below Open. Better signal if it makes lower Low.
  • 5. Trading Triggers - Part 2 CONTINUATION BARS Not every major pivot point is marked by a reversal bar. Continuation set-ups can still get you in a trade relatively close to the pivot point. Continuation bars are easily identified on a bar or candlestick chart. They always start with either an inside bar or an outside bar. Inside Bar - Today's high and low do not exceed yesterday's high and low. Outside Bar - Today's high and low both exceed yesterday's high and low. Inside Bar Outside Bar
  • 6. Outside Plus Bar STOP LOSSES Losses are part and parcel of trading. Successful traders learn to manage their losses, or shortly find something else to occupy their time. Trade entries are relatively easy. You have an objective set of criteria and when those conditions are met you enter the trade. Stop losses are more difficult because now you are in the trade. The cool hand that pulled the trigger to enter is now firmly wedged between the rock of fear and the hard place of greed. Just a few ideas for objective stop loss points. There are many more. Pattern stops occur when price moves to an extreme that negates the working Elliott Wave scenario. For example, a Wave 2 entry is stopped out if prices violate the pivot price that initiated the swing (Wave Zero). All the pattern stops that we use are set out in the Trading Signals section. Robert Miner, a successful trader and teacher, posits that three, two and one day bar extremes are logical stops. For example, for a long trade that is in the early stages of a Wave 3, the lowest low of the most recent three daily bars (including today) is an objective stop loss point. As Wave 3 progresses into its later stages the stop is moved to two bars or even to one bar. Miner does not count inside bars when computing the extremes. Another method presented by Williams that ties into Miner's one day stop is the Zone Stop. When price bars have run for five consecutive bars in the same zone (shown as five consecutive red or green bars) place a one day stop and move it every day until it gets hit. The important concept is to let the market, not your emotions, take you out of the trade - with a profit if the trade works out for you, and with a manageable loss if it does not. You don't know what the market is going to do next. Don't anticipate. You'll experience a lot less stress and probably make more money too.
  • 7. When Disaster Strikes… Holding trades overnight has certain benefits and risks. We consider it a necessary part of a trading plan to have a "Wealth Building Account" for swing and core trades, which would all be overnight holds. So following your trading plan and playing the proper share size are very important. Properly handled, over time the benefits should outweigh the risks. However, no matter how careful you are, you will have a morning where a position you have is gapping open against you. Remember, overnight there are no stops. Let us say you are long XYZ at $30.00, and at 7:00 a.m. EST the next morning company XYZ makes some announcements. Let us say they are going to miss their next earnings number, and that the CEO just resigned, and that they suspect they have accounting problems. There is a good chance (about 99.99%) that when trading starts the next morning at 8:00 a.m. EST (pre- market trading starts with ECNs at this time) that your stock will be trading much lower. Let's say at 8:00 it starts trading at $26.00. From 8:00-9:30 it ranges from $26.00 - $25.00. Then at 9:00 it opens at 25.10. It will not matter that you have a stop in place at $28.50. During pre-market, stops are not in effect. Then when the market opens, your stop will be filled (if it is GTC, or if you re-entered it at open) at the best price at the time, $25.10, not your desired price of $28.50. So, how do you handle these 'disaster' situations? Here are some tips to put the odds in your favor to manage these situations in the best way over the long term: First, do not panic. Easy to say, but hard to do. However, it will not be hard to do if you have a strategy in place out for these situations. Second, ignore the pre-market trading. From 8:00 until 9:30 only ECNs are trading; some stocks don't trade at all. If your stock is gapping down like this, it will likely be trading, but will likely be trading erratically. Third, when it opens officially at 9:30 EST, do nothing for five minutes. That is right, just watch it. After five minutes, mark off the low and put a stop for half your shares $.05-.10 under that five-minute low. Fourth, let it trade for 30 minutes. Then put a stop for the other half of your shares $.05-.10 under that 30- minute low. At this point, if the stock did not violate the five-minute low, you will still have all your shares, half with a stop under the five-minute low, half under the 30-minute low. You will find on many occasions, that you may still have all your shares, or at least half. Often, after a large gap, the opening half hour puts in the lows for the upcoming days. If your shares do stop, you are usually risking a relatively small amount extra. From there, you can treat the trade as a swing with a one-day trailing stop, or the stock may rebound to prior levels and you can follow your prior plan. While the example given was for a gap down on a long position, the exact same rules hold true for gapping up on a short position. Use 5- and 30-minute highs as stops. Having this as your plan for disaster will help you minimize the losses over the long term.