Skip to main content
Track Exhaustion gap
5 / 6
Search the archiveLibrary
Library

2015issue C1228-33

Exhaustion gap entry, hold, and exit rules as one procedure

This archive case study describes a Gap trading procedure that treats an Exhaustion gap as a signal of oversold conditions, then applies explicit entry, holding, and exit rules as one tradable process.

  • The historical procedure treats an Exhaustion gap as a signal of oversold conditions and then applies explicit entry, holding, and exit rules as one tradable process.
  • The workflow is presented as frequent trading rather than buy-and-hold, so position count and capital use are operating constraints, not afterthoughts.
  • A reported backtest of a top-450 stock universe ran with an average holding of 29 names, used as evidence that the rule set is selective.
  • Editorial: treat the Exhaustion gap setup as one testable entry-hold-exit procedure, not as a chart pattern recognized after the fact.
Entries in this reading2 entries
Current trackExhaustion gap6 readingsGap trading24 readings

One tradable process

The described procedure treats an Exhaustion gap as a signal of oversold conditions and then applies explicit entry, holding, and exit rules as one tradable process.

In this Gap trading workflow, the Exhaustion gap is the signal. The trade is the full set of entry, holding, and exit rules applied together.

Operating constraints

The procedure is presented as frequent trading rather than buy-and-hold. Position count and capital use are treated as operating constraints, not afterthoughts.

Selectivity in the reported test

A reported backtest of a top-450 stock universe ran with an average holding of 29 names. That average is used as evidence that the rule set is selective.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
5 of 6 in the Exhaustion gap track
201624-37 pp.Next on Exhaustion gapFour gap types as falsifiable trade hypothesesAssess a gap by direction, location in the prior move, size relative to earlier gaps, and volume on the day it forms.
All readings on this track · 6 readings
  1. 1987Constructing price gap classifications from follow-through
  2. 1990Breakaway versus exhaustion: classify the skip from both sides
  3. 1990Constructing gap signals from skipped price zones
  4. 2004Constructing gap classifications from price context
  5. 2015Exhaustion gap entry, hold, and exit rules as one procedure
  6. 2016Four gap types as falsifiable trade hypotheses
By fieldEntry and exit rules327 readingsBy year2015181 readings
All 6 readings tagged Exhaustion gap
Also on Exhaustion gap5 readings
1987Constructing price gap classifications from follow-through1990Breakaway versus exhaustion: classify the skip from both sides1990Constructing gap signals from skipped price zones2004Constructing gap classifications from price context2016Four gap types as falsifiable trade hypotheses