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Gap Trading
MetaStock Indicator
Here is the gap-trading system code for use in Equis
International's MetaStock software. For practical reasons, the
system has been defined as an indicator rather than a system,
showing the cumulated profit.
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dn:= 1.0;
up:= 1.0;
gap:= 100*(OPEN - Ref(CLOSE, -1))/Ref(CLOSE, -1);
prf:= If(gap>=up, OPEN-CLOSE, If(gap<=-dn, CLOSE-OPEN,0));
Cum(prf); |
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"Gaps typically reflect the highly charged emotional
feelings of the crowd. For example, if a gap appears on the
upside, it is telling us that buyers are so motivated they are
prepared to pay more for a security today than they did throughout
yesterday's trading session.
"Downside gaps let us know that sellers are so fearful they are
willing to liquidate at prices well below yesterday's trading
range."
-- Taken from Introduction to Technical Analysis - by
Martin Pring, McGraw-Hill, 1998, pp. 127,
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