The Gap Guy

For many investors that had the stomach to hold through the monster sell-off of 2008 or the good fortune to time the bottom perfectly last March, the year of 2009 was remarkable.  As you probably know, I am not a “market timer,” nor a “buy-and-hold” investor.  I am a “gapper” - an active investor who commits a significant portion of my liquid net worth to fading the opening gap in the equity indices.  I do this an average of 6-8 times per month for all of my accounts. 

I too had an excellent and quite profitable 2009. I also had a very good 2008 and 2007 as the image below demonstrates thanks to my market-neutral strategy.  Here's the equity curve for one of my gap-only trading accounts, trading the e-mini futures (primarily S&P 500), since the markets peaked in October of 2007 through present, January 15, 2010:

Note:  The above is a TradeStation generated equity curve for a small, dedicated account (~ $50,000 starting) that was traded more aggressively than my other accounts.  The number of trades is greatly skewed because it counts every partial position scale out as an individual trade. In reality, the above represents about 200 trades over the 30 month period.

Disclaimer:  While my daily trading plan for every one of these gap trades was posted (along with their supporting historical probabilities) for MasterTheGap.com members in advance of the opening bell and prior to my entering the trade, the above is shared explicitly for your education only and to represent what is possible while gap trading.  Individual results vary dramatically based upon experience, discipline, leverage utilized and many other variables.