as a few pips of movement to as much as several hundred pips. Because the tiny area represents a fluctuation in the pricing, a trader can potentially exploit the gap and make a profit. Gaps occur as a result of underlying fundamental and technical factors that vary for each financial market and require monitoring and knowledge by the investor. In other words, a gap occurs when a currency pair jumps from one bar to another with a considerable amount of price distance in between the bars. Gaps are areas on a trading chart where a currency price has moved sharply up or down with little or no trading in between. Since I was trading common currencies between the pairs (i.e. Then I try to let the second position run all the way to the prior close for max profit. The Forex mantra governing the trade is the market hates a vacuum, meaning that the gap between Fridays close and Sundays open must be filled.
I will also show you how to test these different strategies, without risking any real money. Gap trading can be an effective trading strategy that you. Gap trading refers to the areas on a chart where the price of a currency or stock moves sharply up or down with little or no trading in between.
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What is gap trading? The idea is very simple. For some reason, in Forex, this rarely works. Exhaustion Gaps: These gaps occur near the end of a price pattern and signal a final attempt to hit new highs or lows. On candlestick charts, a gap is represented by the large distance between two consecutive candles. Monitoring fundamental news over the weekend can be a profitable activity especially if you are able to detect any major discrepancies from the events of the previous week.
To start with, its very nice to have a heads up on which pairs we can expect to see a gap before the broker opens up on Sunday.
While some traders swear by trading gaps, other traders avoid doing.
Some traders have found that, depending on the particular.
You can rarely see a currency cross gapping during the week, at most for a couple of pips.
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