Short-Term Gap Trading with Fixed Targets and Time-Based Exits

Summary

This short-term method identifies a downward opening gap by comparing the current open with the prior daily close. When the gap exceeds a fixed threshold and there is no position, it enters short, sets a fixed price target, and closes at a specified time if the target has not been reached. The document also proposes chart markings for gaps and target events and discusses possible extensions such as volatility-based thresholds, dynamic stops, and broader trend filters.

The supplied example uses a 150-point gap threshold, a 50-point target, and an 11 a.m. time exit, with a BTC/USDT futures backtest configuration covering one month. No performance results are reported. There is also a mismatch: the prose frames the trade as capturing a rebound, while the code places its target below the short entry, consistent with continued downside. The short entry and risk controls therefore merit careful verification before evaluation; the fixed time exit is not a substitute for a defined stop loss.

Key ideas

• A downward opening gap is measured against the previous daily close and filtered by a threshold.
• The example opens a short position and uses a fixed target plus a time-based exit.
• The published backtest configuration gives no reported performance outcomes.
• The prose describes a rebound trade, but the code's target is below the short entry.
• Gap size, target, liquidity, slippage, and market regime can affect results.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.