Dummy Gapper Trades - Walter Industries, Inc.; Fording Canadian Coal Trust (USA)
WLT and
FDG were earnings gaps.
WLT opened strong but retraced 75% before finding a bottom and beginning the base building process. I saw a 3 PP base at $94.00 and jumped in. Took a partial on weakness and then folded after it took out the morning swing high and gave it back.
I
thought that
FDG was setting up for a flat base breakout so I took an early entry. Once I was in the trade, I didn't feel any volume coming in, so I traded not to lose by moving stop after each completed 15 min. bar. After tagging the
ORH twice, it failed and my stop saved the trade.
Failures usually lead to fast moves in the opposite direction. So I managed to make
FDG work for me by short scalping it twice. The first scalp was a break of a bear flag. The second scalp set up after a full retrace back to the base and a mini C&H heading south.
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