The OOPS strategy, as discussed by Larry Williams, is determined by the presence of gaps on the chart:
  • The opening bar of the new session should be below the previous day's low
  • Or the opening price bar of the new trading session must be above the high of the previous trading day.

The theory behind this pattern is simple and logical: Larry believes that unprofessional traders often check charts and news at night and open their positions when the day begins.

On the other hand, professional traders wait for the real trend to develop during the day and place their orders during the day.

Hence, if the market opens significantly lower or higher than yesterday's range, it is a sign of panic among unprofessional traders. This provides a great opportunity for professional traders to use the amateurs' emotions against them by placing a reverse trade and making a profit.

It is basically a gap trading strategy, or in other words, based on filling the price gap at the opening of the market.

What happens when unprofessional traders often overreact to certain important news even before the market opens and creates certain price gaps when the market opens (especially in stock markets, commodities or stock indices). This price gap is the result of being created by the average crowd.

Soon after, these traders noticed that they were overreacting to the event or initial news. At this point, traders realize their mistake and reassess their position. This causes the price to reverse and a movement in the opposite direction to occur.

This trading strategy provides a lot of valuable information regarding buying and selling on the trading market, even when price gaps rarely appear as this is a 24-hour market. However, the price gap formed in the first session of the week when the market opens is quite common on the trading market, so the OOPS trading system will work best on daily and weekly charts.

The buying strategy for OOPS includes the following key points
  1. There should be an existing downtrend on the chart, at least some of the most recent trading sessions. This is usually indicated by some red candles on the daily or weekly chart.
  2. In the final stage of the downtrend, the market needs to create a gap below the previous low of the previous candle. This gives rise to the OOPS buy signal.
  3. When traders reevaluate the news, the price starts to rise and go above the previous day's low and close. This generates a buy signal and a buy will be executed here.
  4. The stop loss will be placed below the intraday low, which is formed before the price crosses the bottom and close of the previous day.
The selling strategy for OOPS includes the following key points:
  1. Look closely at the chart and see if the uptrend lasted for at least the last few sessions represented by white or green candles.
  2. During the final phase of an uptrend, a bullish gap appears with the opening above the previous session high. It would be even better if the opening price was much higher than the high of the previous session.
  3. As traders reevaluate, prices begin to fall and eventually fall beyond the previous session's high and close. A short (or short) trade should be open when this happens.
  4. Stop Loss is the highest level set for the day before a sell signal occurs
USDJPY Date Time Frame - Example of Larry Williams OOPS Method

Larry Williams' OOPS model has been used by many investors as well as traders and it is known to have a high degree of accuracy. It offers the opportunity to gain valuable profit from filling price gaps.

However, one thing that is very important to remember is that it is not a winning trading system and variations can occur in this system. In addition, a suitable exit method should also be studied to complement this strategy.

Therefore, the best way to get started with the OOPS method is to use a trial and error method. It is you who will have to find out how to best use the OOPS system in different trading conditions and in different markets.