Trabajar El Gap En El Mercado

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Pristine's "Cardinal Rules of Trading"

QUICKLIST for GAPS
Rule 1: "Do not buy any stock that gaps open more than $0.50 above the prior day's close OR
our recommended buy price, whichever is higher."
Example: "We'll look to buy XYZ Corp. once it trades above $50.00." This means our ideal
entry price will be $50.06, or 1/16th above $50.00. The stock actually opens at $50.56, or $0.50above our ideal entry price of $50.06. This is the maximum gap we allow. Any gap greater than
this would be more than our allowable $0.50 allowance, and render the play invalid.
Commentary: Most commonly our recommended buy price (i.e., our ideal entry price) is higher
than the prior day's close, so this is the price to which we add $0.50. If the stock does in fact
gap open more than we allow, atrader may wish to apply our "30-Minute Gap Buy Rule" (see
http://www.pristine.com/aeduc/gap.htm). While a great technique for capitalizing on gapping
stocks, the 30-Minute Gap Buy Rule is NOT used in the reporting of our plays unless
specifically a part of a play's stated entry criteria. The same applies to "Pristine's $1.00 Rule." A
handy technique, it is not applied in our PerformanceReports. Feel free to tailor our plays to
your trading style and personality, using the rules that fit best with your individual risk tolerance.
For the Pristine Lite plays, we allow only a $0.37 gap allowance that is applied in the same
way as the above Example.
Our single exception is the "6-8 Week Breakout Play." For plays labeled as such, please refer to
the Cardinal Rules for a completeexplanation (see http://www.pristine.com/aeduc/cardinal.htm).

The $1 Rule - Once a Winner, Always a Winner
Once a stock (your employee) has moved favorably by $1, you should immediately
adjust your initial stop to your break-even price. Now note that we did not say, "once you have a
$1 gain…" No. You will move your stop to break-even once the stock has risen (fallen if short)
$1 above the idealentry price. It sounds the same, but there is a major difference. Continuing
with the example above, you have bought XYZ at $20. Your initial stop is at $19.25, and you are
looking for a $1.75 to $2 gain. The stock moves to $21, making for a $1 rise. If you were to sell
at this point, you may not be able to get $21. A rise of $1 does not always equal a profit of $1.
But that's not the point.Because it has risen $1, your action should be to raise your stop from
$19.25 to $20, your break-even point. At this point, it's all smooth sailing. You can sit back, and
relax in the comfort that you will make money at best or break-even at worst. Your trade is now
being paid for by the market. And as we've mentioned above, you've got to like that. Special
Note: Our in-house traders use a 75Cents Rule when trading stocks under $12. We encourage
you to do the same.

How to Make Money Shorting Stocks in Up and Down Markets
Now I am very much aware that many market players do not like to short stocks. This bias
against the short side of the market is totally understandable, especially given the fact that the
widespread reluctance is garnered and perpetuated by the various exchangesand the other
powers-that-be. For example, one can only short a stock if it is trading on an uptick. That one

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rule makes getting shorts off (filled) extremely difficult in declining markets. The reason for this
handicap of course is to prevent traders from adding to the selling pressure. Yet there is no bias
of that nature directed against the upside. The exchanges seem to havevery little problem with
the market rising in an unfettered fashion.
Now, the number of stocks that can be made available for shorting, even if they are trading on
an uptick, is being limited by the exchanges. This further handicaps the short seller, and clearly
makes it known that the powers-that-be don't want the public shorting. I don't know about you,
but whenever the higher-ups say "No,...