Runaway Gap
BullishContinuationIntermediateA gap in the middle of a rally that is said to mark the halfway point.
Verdict: UseBitcoin 4H: 0 trades, won —, avg trade — vs random day — (too few trades to judge). Backtest
Price is already in a strong rally, making new highs.
step 1/6
Trade rules
| Direction | Long (buy) |
|---|---|
| Entry | In an advance of at least 10% (7% on Bitcoin) from the lowest low of the last 30 candles, a gap up to a new high. A candle CLOSES above the gap candle's high within 3 candles. |
| Cancelled if | Price trades below the high of the candle before the gap (the gap fills) before that close. |
| Target | Move so far, projected from the breakout |
3 common mistakes
- Expecting the full measured target every time: it assumes the gap is exactly halfway.
- Buying a gap after a rally that has already run for months: it may be the exhaustion gap.
- Holding on after the gap fills: a filled runaway gap is no longer one.
Backtest
same rules every time · equal size · no fees · method| Market | Trades | Won | Avg trade | Random day |
|---|---|---|---|---|
| Bitcoin · 4H · 2017-2026 · too few trades to judge | 0 | — | — | — |
| US large caps (50) · 1D · 2016-2026 | 418 | 45% | +2.15% | +1.98% |
Verdict: UseMade money and beat a random entry on US large caps. Bitcoin had too few signals to judge.
pattern +897%random +826%