Jump to content

Welcome to Digital Money Talk Forum - Forex, Ecurrency exchange and Cryptocurrency Forum Sponsored By Soft-mining.net, Tea-house.biz and BTC-Avalanche.com
Register now to gain access to all of our features. Once registered and logged in, you will be able to create topics, post replies to existing threads, give reputation to your fellow members, get your own private messenger, post status updates, manage your profile and so much more. If you already have an account, login here - otherwise create an account for free today!









Soft-mining


Secure-Investment



Read our Advertising Disclaimers


Refund Policy


Photo

Forex Gap Strategy


  • Please log in to reply
8 replies to this topic

#1
ngocanhno110265

ngocanhno110265

    Advanced Member

  • Members
  • PipPipPip
  • 52 posts
Forex Gap Strategy — is an interesting trading system that utilizes one of the most disturbing phenomena of the Forex market — a weekly gap between the last Friday's close price and the current Monday's open price. The gap itself takes its origin in the fact that the interbank currency market continues to react on the fundamental news during the weekend, opening on Monday at the level with the most liquidity. The offered strategy is based on the assumption that the gap is a result of speculations and the excess volatility, thus a position in the opposite direction should probably become profitable after a few days.

How to Trade?
Select a currency pair with a relatively high level of volatility. I recommend GBP/JPY as it showed the best results during my tests. But other JPY-based pairs should work too. By the way, it's a good strategy to use on all major currency pairs at the same time.
When a new week starts look if there is a gap. A gap should be at least 5 times the average spread for the pair. Otherwise it can't be considered a real signal.
If Monday's (or late Sunday's if you trade from North or South America) open is below the Friday's (or early Saturday if you trade from Oceania or Eastern Asia) close the gap is negative and you should open a Long position.
If Monday's open is above the Friday's close the gap is positive and you should open a Short position.
Don't set a stop-loss or a take-profit level (it's a rare occasion but stop-loss isn't recommended in this strategy).
Right before the end of the weekly trading session (e.g., 5 minutes before the end) you need to close the position.

Posted Image


You can see GBP/JPY pair's last 7 weeks (as of May 24, 2010) and all of them have gaps. 6 out of 7 gaps give correct signals that result in a lot of profit. The last gap gives a wrong signal and yields a medium loss. The average spread for GBP/JPY was 3 pips during the example period and all gaps were much wider than 15 pips, making them all qualifying signals. The net total profit was 1,612 pips in 7 weeks — not that bad.


  • 0

#2
Pamm Manager

Pamm Manager

    Member

  • Members
  • PipPip
  • 27 posts
Thanks for your share, but forex gap strategy not suitable for dailly trader.
  • 0

#3
RASTA

RASTA

    Member

  • Members
  • PipPip
  • 21 posts

because the gap techniques including weekly strategy and only happens every once a week on Monday just outside it will never happen the market gap

Thanks for your share, but forex gap strategy not suitable for dailly trader.


  • 0

#4
standart

standart

    Advanced Member

  • Members
  • PipPipPip
  • 4,800 posts

gap appear in monday at the opening of tokyo session. gap range can be wide but sometimes, gap doesn't appear. point out the gap direction difficult since it doesn't always suitable with the trend direction. sometimes the directions against the trend movement.


  • 0

#5
myregister

myregister

    Advanced Member

  • Members
  • PipPipPip
  • 6,027 posts

It is very hard to earn that much with this strategy alone. Also in weekend gap isn't always exist and this is really bad for you if you depend on this, but if you open a position and gap happened the profit could even double for you, especially if you keep following the trend.


  • 0

#6
mcliffi

mcliffi

    Advanced Member

  • Members
  • PipPipPip
  • 42 posts

This gap strategy seems difficult for a common trader like me and it will take a while to make a trade with it.If it is only on monday then it will be cool for an experienced trader.Though i will try my best to give it a try.


  • 0

#7
myregister

myregister

    Advanced Member

  • Members
  • PipPipPip
  • 6,027 posts

Usually gap happening after the opening of the market, i personally rarely see it happen during business days, but usually see it happening after entering the new week of trading. I know this is hard i also don't prefer this way, but twice i got my profit more with this gap.


  • 0

#8
Alice Frampton

Alice Frampton

    Advanced Member

  • Members
  • PipPipPip
  • 67 posts

It is a very good way of trading with gap if we have got proper experience but at the same time if we don’t have any mastery over it than we must avoid doing as it’s very risky. Mostly expert use for trading and they are fairly successful at it. I am trying this method with OctaFX broker since they allow all technique which includes scalping, hedging, news trading and even EA so that makes me feel comfortable and satisfied.


  • 0

#9
myregister

myregister

    Advanced Member

  • Members
  • PipPipPip
  • 6,027 posts

It is a very good way of trading with gap if we have got proper experience but at the same time if we don’t have any mastery over it than we must avoid doing as it’s very risky. Mostly expert use for trading and they are fairly successful at it. I am trying this method with OctaFX broker since they allow all technique which includes scalping, hedging, news trading and even EA so that makes me feel comfortable and satisfied.

Gap is harder to know, first you must know when is the right time for gap to happen. It is not happening all the time. Somtimes those gap cannot be happen or simply out of your prediction's range. For me gap is too risky but still profitable if you can predict it right, with 10-30 pips profit.


  • 0