Stop-Loss on Gap Down of TSE:TIH (Toromont Industries Inc.) - Sold at $55.81

StuThomson

I’m trying to learn to avoid early trading (premature) down gaps. In most cases I have noticed that the price retraces the gap somewhat then continues to rise over the next few days. This has happened to 4 of my stocks within the last 1-2 weeks.

Please see the attached links for my annotated charts of TSE:TIH.





All comments & thoughts are welcome. Thanks for taking my question!

markd

For some reason, your links are unavailable.

StuThomson

Thanks for letting me know. I've now attached the PDFs directly. I hope these are accessible.

markd

Re TIH intraday - my two cents, for what it's worth: the wide gap is there to catch stock for sale cheap due to triggered stops. Professional traders know those stops are likely to be there, so they short enough to force prices to open below the stops, then buy in their shorts AND all the stock dumped on the market by the hit stops. If you don't want your stop to get hit, place it FAR away (and take a smaller position) or don't place one.

markd

Re TIH daily - you didn't say where you got in, so it's hard to say when you "should have" gotten out. About your sell ideas - sometimes they would work, and sometimes they wouldn't. You would have to research them to find the probabilities. Big job. To my mind, trends are about support and resistance. In an up trend, when resistance (the highs) doesn't break, but support ( the lows) does, it's a problem in the making for longs.

markd

Re TIH weekly - you may be correct about the Force 13 signal, but again, you would have to test it to know.

My own approach would be, in an up trend, higher volume should produce higher prices. If not, it's a warning that buyers have lost comparative strength to sellers. The third weekly bar in October is higher volume vs the previous bar but produces a down close (breaking the lows of the two prior bars - support). If buyers don't respond to that, then lower prices are more likely.