One of Larry Williams’ best-known setups is called Oops!: We are waiting for the market to open. We take as a reference the daily bar of yesterday, with its open, evolution and close. When the market opens, suppose a gap up occurs. A gap up takes place when the open is higher than the highest point that was reached on the previous day; a gap down occurs when the open is lower than the lowest traded point of the previous day.
When
a market opens at a very high level and there is a gap up, it is very
strong. So, we obviously suppose that it goes up. It will probably do it
but, if for some reason it starts to fall and then reaches the highest
level of yesterday, it is as if it said: "Oops!, I was wrong. I’m not strong, but weak."
In this case, we open a short position at this level. We enter short
because we imagine that the market (and the players in the market)
realizes it isn’t that strong. Actually, the market is weak, so it will
go down.
To use this setup, we obviously need a stop-loss whose size depends on the market we are trading. How do we close this position? Larry Williams proposed a bailout exit he called "first profitable open". This consists in staying in the position until, on the following day or days, the market opens somewhere below the entry level (because we are short). When that happens, we close the trade. So, we keep the position until we get the profit or, obviously, when we are stopped out. We can also close the position at the end of the same day. The one suggested by Larry Williams is however the best one, although it sounds quite weird. Believe me, the first profitable open is a very effective close of the position.
This is the basic version of the Oops! Anyway, I know Larry Williams made some tweaks to it. The Oops! works, but today this specific setup is quite rare. The reason is that many markets trade for 23 hours a day now. So, it’s quite hard to have a heavy gap in just one hour. Maybe, you can have one after the weekend, but normally it’s not there.
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Andrea Unger, a multiple-time World Trading Champion and systematic trading educator, has extensively analyzed and promoted the Oops! pattern: Today the "Oops!" setup performs relatively better in the German DAX (and similar European markets with session breaks) compared to US indexes primarily due to differences in trading hours and the resulting quality and frequency of gaps. In his explanations and backtests (particularly on DAX futures), he highlights the following reasons why it remains more viable there than in highly continuous US markets like the S&P 500 (ES futures):
■ Session Breaks Create Genuine Gaps: The DAX traditionally operated (and Unger often tests using) an 8:00 AM to 10:00 PM CET session. This overnight close provides a meaningful window (roughly 10 hours) for news, events, positioning, or sentiment shifts to accumulate, leading to clearer, larger gaps at the open relative to the prior session's high/low. In contrast, US index futures trade nearly 23 hours a day with only short daily maintenance breaks, which minimizes such gaps during regular weekday sessions.
■ Gap Quality and Filter Effectiveness: Unger notes that applying a minimum gap size filter (e.g., 15-20 ticks/points) significantly improves the setup's performance on the DAX. Larger gaps driven by the session break increase conviction in the "overreaction" and subsequent reversal, yielding higher average trades and better risk-reward. Historical tests from around 2010 onward showed positive equity curves for years on the DAX, even if performance weakened in recent years (post-2022).
■ Market Structure and Liquidity Dynamics: European equity index futures like the DAX historically exhibited stronger mean-reversion behavior at opens due to less continuous participation. US markets, with global 24-hour liquidity (including Asian and European sessions overlapping), see more efficient price discovery and fewer "pure" failed gaps.
Unger acknowledges that even on the DAX, extended trading hours (introduced later) and post-pandemic liquidity shifts have reduced the pattern's edge over time, but it has held up better than in US equivalents due to the retained session structure in testing and practice.
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Jarrod Goodwin details an empirical test of Larry Williams' "Oops!" trading strategy applied to 14 different Forex pairs. The strategy focuses on exploiting price gaps that occur between the opening of a new session and the previous day's high or low.
Strategy Overview & Rules:
■ Concept: The strategy bets that the price will revert into the previous day's trading range after a gap.
■ Entry: If the open is below yesterday’s low, the trader buys at 18:30 EST. If the open is above yesterday’s high, sell short at 18:30 EST. This specific time was chosen to avoid wider spreads typically seen at the market open.
■ Exits Tested: Three different exit strategies: end of the session (16:30 EST), after three days, and after six days.
Key Findings & Results: ■ 1-Day Exit: The portfolio generated 8,600 Pips, with 10 out of 14 pairs being profitable.
■ 3-Day Exit: Performance degraded significantly, resulting in 3,000 Pips and more losing pairs.
■ 6-Day Exit: Highest net profit at 20,500 Pips with NZD/USD, showing a particularly consistent equity curve.
The strategy has shown signs of performance degradation in recent years, which coincides with a decrease in the frequency of trade opportunities across the tested pairs.
See also:
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