GAPS in the direction of the trade

S&P500 (^GSPC )  - 01.01.2004– 05.10.2010 - daily data

Gaps in the direction of the trend has positive bias. Win% and Profit factor is high. Netprofit is not spectacular but do not forger that we did not use any money management or stoploss system. System is exiting after 10 days without any initial stop.

when stocks gaps up in the direction of trend demand is high buyers are willing to pay more.

Gaps is defined as Open today > High of yesterday

Long

if Close > 200 day SMA and 10 day sma > 10 day sma yesterday buy stop at the high of today.