Forex Trading – Gaps

[asiaforexmentor1]

Forex Trading – Gaps

Gaps happen when the forex market closes and the forex market have some movements before the market opens.
When the gap forms, What will they happen.
If you had read out previous post about gaps.
It will come as no surprise to you.
Ans: Gaps usually closes. The market will usually close back the gap that is formed.
There are plently of gaps the formed when monday opened, such a wonderful thing.
Got quite a number of pips just by closing the gaps.
These 2 charts are some of the example of the gaps these week, but there were plenty besides these 2.

Ezekiel Chew

 

[Dirk58]

interesting

hi Asiaforexmentor1,
yep, Gap Trading is mostly an nice way to make pips as I did it some time. Because I´m living in Europe it´s sleepin time over here when market starts so I left it a while ago.
I think you are doin this quite a while so would you tell us which pairs overall open mostly gaps?
I ask because of an idea I have in mind.
thanks in advance
Dirk58

 

[Enivid]

Trading the gap filling idea can be very dangerous as there is no obvious stop-loss level in such trades.

 

[Dirk58]

ya

of course and you never know how far the price will move in opposite direction and how long it will take until gap gets closed..... thats why I asked about the preferred pairs. I will test my idea with Yen Pairs for now. Anyway, thanks Enivid

 

[Easy Trader]

As Enivid stated gap trading can be very dangerous, I have seen gaps take weeks to close and some never do. The safest way I have managed to trade gaps (which is not very often) is to take them on larger timeframes and place a buystop or sellstop order 10-15 pips inside the gap. The 'theory" here is that most times when price crosses into the gap it usually closes it. I keep a tight stoploss, low risk, and place my take profit 10-15 pips 'inside' the gap to make sure Im out of the trade should it whipsaw after closing the gap....I'm pretty picky when it comes to gap trading and pass on most gap trades. The chart Asiaforex posted is definetly a decent one in my opinion. But to blindly trade the gap on the open of the session would (to me) be suicide.

 

[ezrydn]

Dirk,

Check Enivid's Gap Strategy post on the first page and note my post (#20). Since you're in Europe, there's no reason not to use the Gap. Just open your choice early. Close it out when signal reappears. Hope this helps.

 

[ezrydn]

I'm now 15/15, all wins. Indications led me to chose AUDCHF on a SELL order. It came in at a little over $270 profit.

 

[Peter Brandley]

The best pairs to trade gaps: GBP/CAD, EUR/CAD, EUR/AUD, AUD/JPY, GBP/CHF, USD/CHF, GBP/USD and EUR/USD.

and Preferred timeframe: 5 Min

Rules To Trade Bearish Gaps

> Downward gap should be at least 20 pips wide.
> Identify bullish reversal patterns below the bearish gap so that you can enter a long position in the market. For example, you could use bullish candlestick reversals patterns, reversal chart patterns and trend lines to pinpoint long entries.
> Enter long at market after the bullish reversal pattern is complete.
> Place your stop loss 1 pip behind the low of the bullish reversal pattern.
> Friday's close price should be your target price.

That may helps whose who trade gaps

 

[ezrydn]

When I trade the "weekend Gap," I look to my two indicators , "Forex Currency Index" and "Trend Scanner," to pick the best pair to go with. "Forex Currency Index" tells me whether to go with selling weakness or buying strength so I can pit specific currencies against each other. "Trend Scanner" tells me which direction to trade. That's about a 5 minute process. Then, it's just open an order, loss signal, and walk away for 48. Just gotta be ready to close the order as soon as signal reacquired.

For the past 4 months, it's been a weekly win without losses. I've garnered as much as $860 and as little as $20 but it's always profit. Plus, trading the weekend gap has already paid for the two indicators, several times over.

I had the weekend gap on my mind when I saw the ad video for the indicators and KNEW this was the answer I was looking for. They work in harmony and haven't given me a bad signal yet.