Forex Gap Strategy

[ezrydn]

Enivid,

I understand your frustration. I mentioned this as a strategy over on MT5 and only one person caught on. I finally gave up on them. It's in their "Trading Strategies" section, named The "Unheard Of" Strategy. I stumbled across it when I got caught with an open trade one Friday.

I'm running it now and if Sunday is like the rest, I'll be 14/14 wins.

I do admit i have a "ringer." I use Hector De Ville's "Forex Currency Index" and TrendScanner" Indicators to make my informed choice. They haven't failed me yet. I use no charts at all. I BUY Strength and SELL Weakness via those two indicators ALONE.

My method:

Use the two indicators to pick target pair.
Open order 2 min prior to LOS.
Walk away for 48 hours.
Close order after AOS Sunday.
Bank it!

Everyone's locked into "traditional" and this type of trade is anything BUT traditional. No SL. No TP. No trail Stop. Nothing but Open/Close Order. The head work one needs to concern themselves with is "making the pick." There are NO pixs of this trade, other than an Open/Close Order shot.

So, yes, I agree with you on this one! Gap Trading isn't for the squeamish or uncertain, to be sure. However, it's just another profitable idea we who understand utilize in our bag of tricks.

 

[wizardpro]

HI,
I am not sure if I understand you. Are you saying this method Gap work or you are saying youare using your own methods and it work ?
I can using the friday Gap so far not succesfully at all.

 

[ezrydn]

I have my own way of tackling the Gap. I use NO SL, TP or TSs. I only open an order on Friday and close it on Sunday. I've had 15/15 wins, no losses. HOW? Ah, that IS the question, isn't it?

I use only two indicators, WITHOUT a chart, to make my selection. I use Hector De Ville's "Forex Currency Index" and Trend Scanner" indicators. Google them or him.

 

[ezrydn]

Wizard,

Here's what I use to decide. Currency Index is upper, Trend Scanner is lower.

I look at nothing else to decide.

 

[Enivid]

I have posted a poll on trading the gap in Forex:

http://www.earnforex.com/blog/2012/09/how-to-trade-weekend-gaps-in-forex-poll/

Please take some time to vote. Thanks!

 

[Peter Brandley]

This method is good enough to reduce the risk of loss even though it was quite old and rare people who use nowadays. We can do this by using indicators or do not fit our respective capabilities. But it would be nice if you try it on a demo account to prove the truth of this method

 

[optionking]

Gap Trading has always proved to be profitable for me, as long as you know what you are doing, you have pretty good edge with defined risk and rewards. Love it.

 

[ezrydn]

There are actually two methods of trading the weekend gap. Enivid's and mine. Mine works within the gap, as it's forming itself and Enivid's begins after the gap has formed. I think my way is easier but, of course, I'm jaded. LOL

What this proves is there are different avenues of approach to most things in life, Forex included. I found my method by making a stupid mistake of not payiny attention to time. From there, seeing the results, I saw opportunity, jumped on it and refined it to where I have 90%+ of winning the Gap. And anything in the + column is a win.

Sometimes you just have to crawl outta the box, have a good stretch and breath in a new idea, no matter how outlandish it may seem, to open a new opportunity door. Forex can be like a garage sale. Many old disgarded items hiding a gem or three. You just need to be open to them.

 

[mynameis]

very risky if you ask me

 

[ezrydn]

Out of all my gap trades, I've lost ONE. When you know what you're doing, the risk is very slight. Another thing. All the articles and honorable mentions state to follow up on Monday's open. NOT! I check my gap trades the moment signal reappears Sunday afternoon. Why? Movement of price will eat your gap profit to where come Monday, you achieved NADA.

I've been so engrossed in my Silver trading that I've missed placing any Gap trades for the last couple of weeks.

 

[Binary Trader]

Weeks with gaps are more common than the weeks without them. Especially on volatile pairs like GBP/JPY.

BTW, the given trading strategy can be enhanced by considering the direction of Friday's candle and comparing it to the direction of the gap.

Hi Enivid, please kindly explain the relationship between the direction of Friday candle and direction of gap. Are they often suppose to be opposite of each other or concurring?
One more question is, which time frame candles do you look at? daily candles or 10 min candles, etc.?
Thanks!

 

[Enivid]

I never even attempt to forecast gap direction.
When trading weekly gaps, I look at weekly (W1) candles.

 

[Binary Trader]

Thanks Enivid. maybe i just took it wrong when i saw "the given trading strategy can be enhanced by considering the direction of Friday's candle and comparing it to the direction of the gap". Please explain what you meant by that and what you look at or what you derive after comparing the directions.

 

[Enivid]

What I mean is that the original strategy only takes into account the direction of the gap, it does not consider the Open/Close relation of Friday's or previous week's candle. Perhaps, gap-downs are better traded following the bearish Friday/weekly candle or vice versa.

 

[metaneural ea]

I think you hit the nail on the head Enivid. It is not enough to simply use the 'direction' of the gap. I put direction in quotes because a gap can be a large gap up and the market can immediately drop afterwards - so what direction did the gap up really signify?

The fact is this strategy is not a strategy but I believe it may be possible to use gaps in combination with an actual strategy.

What I mean is that the original strategy only takes into account the direction of the gap, it does not consider the Open/Close relation of Friday's or previous week's candle. Perhaps, gap-downs are better traded following the bearish Friday/weekly candle or vice versa.

 

[sheriffonline]

I have backtested this strategy.
results looks good.

 

[sheriffonline]

Hi Enivid,

Date:11/03/2013
Its just a question to confirm whether i understood this gap strategy correct!

Accourding to my broker terminal:

Friday's Close: 143.22
Monday's Open: 143.14
Fixed Spread: 3

According to the strategy if monday's open below the friday's close we go long and exit on friday end of market hours.

But here the gap of close and open is just 8pip, which is not even 5 times of spread.(5*3=15)- 3 is spread.

So we consider the signal is not true.

am i understood correct?

Please reply?

 

[Enivid]

Yes, everything is correct.

 

[sheriffonline]

Hi,

According to GAP strategy today all conditions applied for GBP/JPY Buy Order.
Lets see the weekend for more piping.

Gud Luck
Sheriff

 

[Enivid]

Yeah, the gaps were huge today. Please do remember that not every qualifying signal will be profitable. Some of them will end up with loss.