Enhanced Stop Loss Management Saves The Day With Opening Gap Trade

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.

We are currently testing the enhanced stop loss functionality of version 1.9, which allows users to enter their own stop loss and then to have the automated system move the stop when various profit targets are hit to preserve profits during a trade.

This paid of handsomely during todays trading of the opening gap with S&P 500 futures, Dow futures (YM) and ensured a winning trade with Nasdaq futures (NQ).

By setting a user defined stop loss it is possible to widen the stop according to the risk tolerance of the user. Setting the stop loss size to the approximate size of the opening gap can pay off, as happened today, although it does create a risk:reward ratio of around 1 – lower than the automated system trades in default mode.

Before the open of the ES today we estimated the opening gap size (about 2 points) and then set a two point stop loss into the parameters of mnGapAutotrader.

The wider stop loss wasn’t hit and the trade then went on to fill the opening gap and create a winning trade with a $362 profit. See the image below.