July has been a very profitable month for mnGapAutotrader, our automated trading system that fades the opening gap.

mnGapAutotrader, our automated trading system that fades the opening gap with index futures, achieved spectacular results today.

If there is a good example of the benefits of using an automated trading system to trade the opening gap, the performance with Dow futures (YM) today is it.

The latest version of mnGapAutotrader, which fades the opening gap is in final beta test at the moment, however its more flexible stop loss management saved the day with index futures today.

As with any trading system – automated, or manual, trade management and risk control play a large part in determining profitability over time. mnGapAutotrader has been enhanced with better stop loss management, as we explain in this post.

Market activity has not been too kind to the opening gap trade over the last few days, however the mnGapAutotrader, which fades the opening gap on index futures, performed very well today – making $775 profit and putting it firmly in the green this month.

There was a very large opening gap for all the index futures yesterday and I predicted that it was unlikely to fill. It just goes to show that you cannot second guess the opening gap trade, as the gap did almost fill on the S&P 500 futures after all.

Today was always going to be difficult for the opening gap trade and it was inevitable that mnGapAutotrader would be stopped out with all the major index futures.

This post will be updated regularly with the trading results achieved in July 2010 by our mnGapAutotrader, which automatically trades the opening gap.

Although we advocate not second guessing the market when trading the opening gap, as even large gaps can be unexpectedly closed, today did not look promising for two major reasons.