Larry Williams published a description of a short-term trading method in 1979, a valuable one that is based on a pattern observed often in markets. The methodology was presented in his book, How I Made One Million Dollars Trading Commodities. It is still used by many traders with varying adaptations. The OOPS signal is a gap trading method that fades the direction of the opening gap. It is named thus, according to Williams, because when a broker would report to his clients that they were stopped out, he would call them and say, Oops, we lost.
The rules are:
When a market opens lower than the previous days low, a trader would place a buy-stop a few ticks above the previous days low.
When a market opens higher than the previous days high, a trader will place a sell-stop a few ticks below the previous days high.
Markets open and gap overnight, due to a reaction stemming from a news announcement or event occurrence. The gap is based on the opinions that are formed by the crowd, savvy traders, and active players in that market. After the open, traders could realize that the markets price had overreacted from the initial event, which caused the market to create the gap in the first place. The favorable outcome for the OOPS to work occurs as traders reevaluate the impact that the news or event had on the markets price. Prices then reverse and move back in the opposite direction of the gap.
OOPS is based on an overnight gap with the open, for example, higher than the previous high. If the gap prints good volume due to short covers and the crowd is willing to follow the trend, the setup for the trap is ready.
Against fresh money in the direction of the trend, professionals apply techniques to fade
opening gaps. Statistics say that there is a tendency to fill gaps in the markets.
A deceptive move could have been orchestrated to have a high/low open. After the open, prices would swiftly change direction. Deception in the markets is always behind the corner.
Entering in the opposite direction of the gap is based on a sentiment change in the market. If that does ot happen, a trend day will occur and the market would gap and run. You would have professionals to over their positions, summing up with the crowds fresh money in a volatile and directional nvironment: a trend day!
The OOPS signal is based on a psychological component. On the news or event, the market gaps in one direction, but there is no momentum and followthrough action, so prices reverse. If a trader gets suckered into bullish news and buys, once the market heads lower, he would sell that position. That is the force that drives prices to move lower. Consider also that most of the time the opening price will be near the high or low of the day 80% of the time. The OOPS provides, therefore, an excellent risk/reward ratio.
The rules are:
When a market opens lower than the previous days low, a trader would place a buy-stop a few ticks above the previous days low.
When a market opens higher than the previous days high, a trader will place a sell-stop a few ticks below the previous days high.
Markets open and gap overnight, due to a reaction stemming from a news announcement or event occurrence. The gap is based on the opinions that are formed by the crowd, savvy traders, and active players in that market. After the open, traders could realize that the markets price had overreacted from the initial event, which caused the market to create the gap in the first place. The favorable outcome for the OOPS to work occurs as traders reevaluate the impact that the news or event had on the markets price. Prices then reverse and move back in the opposite direction of the gap.
OOPS is based on an overnight gap with the open, for example, higher than the previous high. If the gap prints good volume due to short covers and the crowd is willing to follow the trend, the setup for the trap is ready.
Against fresh money in the direction of the trend, professionals apply techniques to fade
opening gaps. Statistics say that there is a tendency to fill gaps in the markets.
A deceptive move could have been orchestrated to have a high/low open. After the open, prices would swiftly change direction. Deception in the markets is always behind the corner.
Entering in the opposite direction of the gap is based on a sentiment change in the market. If that does ot happen, a trend day will occur and the market would gap and run. You would have professionals to over their positions, summing up with the crowds fresh money in a volatile and directional nvironment: a trend day!
The OOPS signal is based on a psychological component. On the news or event, the market gaps in one direction, but there is no momentum and followthrough action, so prices reverse. If a trader gets suckered into bullish news and buys, once the market heads lower, he would sell that position. That is the force that drives prices to move lower. Consider also that most of the time the opening price will be near the high or low of the day 80% of the time. The OOPS provides, therefore, an excellent risk/reward ratio.