DISCLAIMER ANY AND ALL FORWARD LOOKING STATEMENTS HERE OR ON ANY OF OUR SALES MATERIAL ARE INTENDED TO EXPRESS OUR OPINION OF EARNINGS POTENTIAL.

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2 DISCLAIMER The author and publisher of this book and the accompanying materials has used his best efforts in preparing this information and system. The author and publisher make no representation or warranties with respect to the accuracy, applicability, fitness, or completeness of the contents of this information or system. He disclaims any warranties (expressed or implied), merchantability, or fitness for any particular purpose and any personal liability, loss, or risk incurred as a result of the use of any information or advice contained herein, either directly or indirectly. The author and publisher shall in no event be held liable for any loss or other damages, including but not limited to special, incidental, consequential, or other damages. As always, the advice of a competent legal, tax, accounting or other professional should be sought. The author and publisher do not warrant the performance, effectiveness or applicability of any sites listed in this book. All links are for information purposes only and are not warranted for content, accuracy or any other implied or explicit purpose. MATERIALS IN OUR PRODUCT AND OUR WEBSITE MAY CONTAIN INFORMATION THAT INCLUDES OR IS BASED UPON FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE SECURITIES LITIGATION REFORM ACT OF 1995 (USA). FORWARD-LOOKING STATEMENTS GIVE OUR EXPECTATIONS OR FORECASTS OF FUTURE EVENTS. YOU CAN IDENTIFY THESE STATEMENTS BY THE FACT THAT THEY DO NOT RELATE STRICTLY TO HISTORICAL OR CURRENT FACTS. THEY USE WORDS SUCH AS "ANTICIPATE," "ESTIMATE," "EXPECT," "PROJECT," "INTEND," "PLAN," "BELIEVE," AND OTHER WORDS AND TERMS OF SIMILAR MEANING IN CONNECTION WITH A DESCRIPTION OF POTENTIAL EARNINGS OR FINANCIAL PERFORMANCE. ANY AND ALL FORWARD LOOKING STATEMENTS HERE OR ON ANY OF OUR SALES MATERIAL ARE INTENDED TO EXPRESS OUR OPINION OF EARNINGS POTENTIAL. MANY

3 FACTORS WILL BE IMPORTANT IN DETERMINING YOUR ACTUAL RESULTS. FURTHERMORE, THE PUBLISHER AND THE AUTHOR DO NOT GUARANTEE THAT THE HOLDER OF THIS INFORMATION WILL MAKE PROFIT FROM THE INFORMATION CONTAINED HEREIN. ANY REFERENCES TO INCOME POTENTIAL, INCOME EARNED OR INCOME TESTIMONIALS ARE NOT A GUARANTEE OF YOUR INCOME, NOR ARE THEY REPRESENTATIVE. IN FACT NO GUARANTEES ARE MADE THAT YOU WILL ACHIEVE ANY RESULTS FROM OUR IDEAS AND TECHNIQUES IN OUR MATERIAL AT ALL. THERE IS NO GUARANTEE YOU WILL DUPLICATE THE RESULTS STATED HERE. BY INVESTING IN STOCKS BASED ON THESE TRADING METHODS, YOU DO SO AT YOUR OWN RISK. Any testimonials represent the results of exceptional talent, hard work and ability. Your success will depend on your own hard work, talent and ability. As with any business, it is up to the individual owner of said business to ensure the success of the business. Involvement in any business including this one carries with it the inherent risk of loss of capital. It is strongly recommended that the purchaser contact any and all federal, state, and local agencies which may regulate, tax, or otherwise control the commencement of a business such as the one presented here. The publisher and author do not intend to render legal, accounting, or other professional advice in the documents contained herein. Avery Horton The Rumpled One Mark Crisp The Stress Free Momentum Trader

4 Copyright Notice No part of this ebook may be reproduced, stored in a retrieval system or transmitted by any means, electronic, mechanical, photocopying, recording, or otherwise, without the written permission from the author.

5 Fading The Gap - Day Trading Profits Method by: Avery Horton The Rumpled One Presented by: Mark Crisp The Stress Free Momentum Trader Gaps are like windows and, like all windows, at some point they are going to close. The key is to be able to predict accurately if the day s gap (window) is going to be filled (closed). Not all gaps are the same, of course. Some appear at momentous market reversal points and take days or even weeks to get filled. Much more common are those gaps that are news reactions or fishing expeditions. They are smaller in nature and can be faded regularly. Gaps are like windows and like all windows at some point they are going to close. The key is to be able to predict accurately if the day s gap (window) is going to be filled (closed). Past experience suggest that there is an 85 percent chance that the gap will be filled that day. By studying the pre-market volume, you can get a better idea whether the morning gap is running on a full tank of gas, or is fast approaching empty.

6 When gaps are filled within the same trading day on which they occur, this is referred to as fading. For example, let's say a company announces great earnings for this quarter, and it gaps up at open (meaning it opened significantly higher than its previous close). Now let's say that, as the day progresses, people realize that the cash flow statement shows some weaknesses, so they start selling. Eventually the price hits yesterday's close, and the gap is filled. Many day traders use this strategy during earnings season or at other times when irrational exuberance is at a high. Whatever the exact reason, gaps are the result of some kind of event happening while the market is closed. The result is the buying or selling pressure at the open of the next day, which will make the stock open at a different price than where it closed. Here are some concepts and general rules about gaps. First, we generally never buy a large gap up at the open or sell short a large gap down at the open. When market makers have the chance, they will often exaggerate the gap. Also, large gaps are already extended, making the play risky. We tend to "fade" the gap initially, if played at all. Fading means to play the stock to come back in to where it was. Fading a large gap up would be to go short the stock as it trades down after a large gap up. The Method: The Key to this method is to take sure small profits and not to get greedy. A $0.20 profit on 1,000 shares is $200. Make that every day in 30 minutes and you will be happy! It goes like this...

7 1) I select the stocks to trade each based on statistics... gap fill 85% of the time or better and/or high - open > $.50 over 85% of the time. 2) Remember, I said the stock must move at least $.10 TOWARDS THE PREVIOUS CLOSE BEFORE I ENTER THE TRADE. 3) If you want a stop it would be open -.10 for long entry and open +.10 for short entry (which is entry for going the other way!) 4) Exit? That depends on how greedy you are shares times.$12 nets $100 after commission. If it stalls it falls, ride it until you see any sign of weakness then take your money off the table. 5) As is read this, it is exactly 30 minutes after the open: Typical Trading Day: Click link for large image: - you need to be connected to the internet.

8 NO trade on SHLD. GOOG filled the gap. AAPL, SNDK made at least.12 HANS, ISRG dipped and reversed. Look at the low time... not much action to the downside. And if you look at the middle, they were above the previous day's middle. 1) Trade - go long if the stock gapped down, go short if the stock gapped up. 2) at/near the open, that would be 9:30 AM Eastern time. 3) at/near the open price, that would be the price of the FIRST trade of the day for the stock. To go long, the price should be between the open +.10 and open To go short, the price should be between the open -.10 and open You want to make sure the stock is moving one way or the other. You want to trade stocks that have and average daily volume of at least 1,000,000 shares and that have a day range over $1.00 4) Take profit as soon as possible. You should be finished trading in 30 minutes or less. Explanation: 1) Trade - go long if the stock gapped down, go short if the stock gapped up. No big brainer here. We are fading the gap so if a stock gaps UP we want to trade down short and if a stock gaps

9 down we want to trade up long. Fade the gap..not go with the gap. 2) At/near the open, that would be 9:30 AM Eastern time. We are looking to get in as soon as the market opens. We are trading the opening range so to speak. Not waiting for the dust to settle. With this method we are actually looking to be finished by the time the stock settles into its routine. You will find most of a stocks volatility happens in the opening 30 minutes. 3) At/near the open price, that would be the price of the FIRST trade of the day for the stock. To go long, the price should be between the open +.10 and open To go short, the price should be between the open -.10 and open You want to make sure the stock is moving one way or the other. Very basically what you are waiting for here is some small confirmation before entry. So if a stock gaps up you want to see it come down at least $0.10 before shorting. Examples 1) AAPL gaps up to $65.50 At the open you place a short sell at $ If you are NOT filled in the first 20 minutes of trading scratch the trade. If filled your profit target is $0.12 to $0.25 or: $65.28 to $65.15 (adding in the -$0.10 safety factor ) 2) The opposite for a stock that gaps down:

10 GOOG gaps down to $250 Anywhere from 9:30 to 9:50 place a buy order in at: $ Initial stop at: $ (-$0.20) Target is: $ to $ Whilst these profits seem really small. You have to bear in mind we are trading in less than 30 minutes a day the opening price range. This IS NOT trend following where you have to press your big winners. This is all about taking small sure profits from the stocks. You need to ideally be trading 500+ stocks per trade. That would be $110 - $125 profit (before commissions) per trade. Wait until you get up to a 1,000+ stocks per trade. You want to trade stocks that have an average daily volume of at least 1,000,000 shares and have a day range over $1.00 From Avery: 1,000,000 shares over at least 10 days. I usually use 30 days minimum. Price range is not relevant. I look for the daily range to be over $1.00. Usually the stocks are in the over $20 range. The idea is to take dimes and quarters per share and print $100 bills shares is what I usually trade. At the open, there is volume and volatility - that's what makes this work!

11 How many stocks at a time? That is up to the trader. Start trading one stock, then as you get comfortable, add another and another. That's why I wrote AutoAvery. The computer can handle more than I can. It's not tricky at all. Keep to liquid stocks that have a good daily range of over $1. No point in trading stocks that do not move. Do not concern your-self with price range. As you will find this filter automatically keeps you the higher priced stocks. What s important is the daily range and volume. A great scanner you can use to find these stocks is at: Use the Launch Yahoo Finance Stock Screener And the scan is: Exchange = NASDAQ Volume => 1M BETA: => 2

12 Click link for large image: From this you have your list of stocks that you will look at daily for the Fading the Gap Trading Method. To Manage Your Daily Gap Trades Use: Traders can use for free. Just load the program and tell it what real time data feed to use. Then format the portfolio display to have Change from OPEN, Previous Close, Open, GAP and Value Ch% on it:

13 Click links for large images: You can use ANY real time data feed to "manage" your trade: - if you sort on %change, then you basically KNOW THE GAP - can watch 3 level IIs here FOR FREE. Remember: Fading the gap is going for sure thing $0.20 to $0.50 profits in the first 30 minutes of trading. DO NOT GET greedy. Easy come. Easy go in this trading method. You are here to milk the trade for all it is worth. It s all about quick. Sure, consistent daily profits.

14 The Rumpled One s Daily Crossover Method Only 1,000 Copies Will Be Sold Whilst Avery just loves trading those opening gaps his most profitable daily method is what he calls the Daily Crossover Method. It is a day trading method for getting $0.5 to $1.0+ profits but it can be adjusted to swing trade for 1-5 day trades going for $3+ moves. Check it out at: