Weekly Gap Strategy

Hi,

I'm sure a lot of you already know about Gap trading.

I am posting the Gap finder indicator.

I have found this on this website, dunno who's it is.

Anyway, in the input section of the indi you can adjust the minimum size of the gap you want to be looking for.

I adjusted mine to 10 pips .

After you place it on your'e chart you can either use it with jap. candles or switch to line chart.

The line chart is good if you want to do historical check on the sizes of the individual currency pairs gaps.

I checked back about 6 months of 6 currencies. This is tedious so I stopped.

I found that the biggest gaps are created by GBP/NZD.
Howeve the gaps are 95 percent of the time created when the market opens on sunday(NY,east) and thats when the spreads are the widest.
So average gap for GBN/NZD was around 35 pips. When I checked it last Sunday after the market opened the spread was 29 pips.
So obviously you cant trade that.
But the next best pair was EUR/AUD and the average pip gap was about 22 pips and the best thing was the gap was closed most of the time. Meaning the price returned to original price of Friday close.
And last Sunday I waited to see the spreads and by 5.30 pm Est time the spread for Eur/Aud reduced to about 6 pips. So I took the trade and gained 18 pips.

Now this is the way to trade the gap, as soon as Sunday opens the gap is produced, so you check the size of the gap and compare it to the spread, if you think its worth trading do it, if not wait for the spread to go down and than trade.

The line chart has arrows showing the gaps they are almost always at the week opening on sunday.

The candle stick chart you can see an example of how to trade the gap.

The blue line is the opening price on Sunday 5 pm Est/ny.
The red line is your SL it is measured from Friday close price to Sunday open price.
The green line is your TP.
I did not put an entry line there as you can see.
As I mentioned earlier the spread is too big when the price first opens so you have to wait for the spread the go down to manageable levels.

If you check back in history most currencies will fill the gap most of the time. Its almost like guaranteed money in your pocket but no so. Because of the spread.
So you have to check live every sunday 5pm.

P.S. the usd/jpy for the months I checked kept going opposite direction of the gap without filling it. So thats something else to look into.
And dont forget the Eur/Aud spreads returned to normal pretty fast and its the one with bigger gaps and more consistent gap fills.

Also in the below example the Gap was about 75 pips so you might take a chance and enter right away even if the spread was say 12 pips. Why? because alot of times the price fills the gap early.

Where is the indicator?
Thanks

is there any need of that indicator we can easily see where is Gap?

Sorry I forgot to post it.

Here it is.

The indicator is to see which pairs gap how much, how often and how often do they fill the gap and all that. Basically it is for you to test out each pair visually and get an idea oh which pair to trade and how to trade it.

Badell no one is forcing to use any indicator.

Like you said you can go through each pair one by one and see how much it gapped if you so please.

Hi guys,

It is 4:52 pm Estrn time,

Waiting for the market to open.

watching Eur/Aud to open with gap.

Than I will wait for the spread to go down.

Ok unfortunately Eur/Aud had no significant gap.

Eur/Jpy had about 23 pip gap and when the spread was 6 pips I shorted it.

Target last weeks close but if I can monitor it I might trail it.
Sl behind the arrow.

Tp= 16-6 about 10 pips (if the spread goes down even further when the target is reached we might get more pips)

Sl=12 pips

eurjpy had only 2.3p gap on both pepperstone and ic markets

Here It came close to tp

When it turned back without tp I closed it with 3.2 pips tp.

Oanda had 18 pip gap

Usually Eur/Aud has a decent gap sometimes 75 pips. But not today.
Gbp/nzd has bigger gaps but the spread is around 30 pips, and than it goes down to 11 pips still tradable.

What are the 2 lines you have on the candle data?

Maybe he don't know, .. no update from him

I heard a lot about gap trading strategy. But I have tried multiple backtests but most of the time there was loss.

Is anyone able to try test results please let us know.

Thanks for sharing your simple & easy strategy with us..

Do you have any other insights about this strategy since your original post is over 5 years old. I have yet to back-test this strategy but does this work now? Because market conditions have changed significantly in the last 5 years...


Best Regards