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Gap Trading

  • #1
  • First Post: Edited Feb 22, 2011 11:10pm Jun 18, 2009 6:34am | Edited Feb 22, 2011 11:10pm
Gap trading exist for a long time already. For forex, it can only take signal from friday close and sunday open thus very less trade.

I have come up with a EA. A very simple one. I believe improvements can be made for a sharper entry.

Pls improve together.

Test the EA with Daily TF

25/12/2009
Amended some of the codes.

23/02/2011
Redesign the EA according to the inputs from threads contributions
Attached File(s)
File Type: mq4 Gap_Trader.mq4   6 KB | 3,535 downloads | Uploaded Feb 22, 2011 11:10pm
  • #2
  • Oct 17, 2009 3:14pm Oct 17, 2009 3:14pm
Quoting doshur
Gap trading exist for a long time already. For forex, it can only take signal from friday close and sunday open thus very less trade.

I have come up with a EA. A very simple one. I believe improvements can be made for a sharper entry.

Pls improve together.

Test the EA with time frame H1
Hi Doshur,
I've downloaded your gap trading robot and will demo it. I am interested in finding a way of strategy testing various SL & TP levels with gap trading to find the best cmbination of lowest drawdown and highest profit (Holy Grail eh!) - do you know how I could do this, or find a program that would also let me back test my own strategies?

Many thanks,.

Mike
  • #3
  • Oct 17, 2009 7:13pm Oct 17, 2009 7:13pm
Quoting blott
Hi Doshur,
I've downloaded your gap trading robot and will demo it. I am interested in finding a way of strategy testing various SL & TP levels with gap trading to find the best cmbination of lowest drawdown and highest profit (Holy Grail eh!) - do you know how I could do this, or find a program that would also let me back test my own strategies?

Many thanks,.

Mike
Hi Doshur,
I tested your V4 but it did absolutely nothing! Data on the screen kept telling me the gap was too small (too small compared to what?)

No matter how I altered the parameters, still nothing happened. Is it maybe not recognising Fridays or Sundays?

Cheers,


Mike


PS I wanted to use your EA for strategy testing and put on manual trades.
  • #4
  • Dec 22, 2009 1:49am Dec 22, 2009 1:49am
i think this is actually a good idea, however can anyone take a fresh look at creating a Manual EA for this concept.
a EA which will state entries and conservative exits.
i can stand auto trading its just WRONG in my opinion, or perhaps that opinion has just been scolded into my head from being burn from all the hype robot vendors...

Any takers?
if i used every commercial EA i would be a brazilianare by next week!!!!
  • #5
  • Dec 22, 2009 1:56am Dec 22, 2009 1:56am
There are no gaps in forex, gap trading is a myth. The only gaps that show on charts are gaps in data with regards to your broker.
  • #6
  • Dec 22, 2009 10:59am Dec 22, 2009 10:59am
hmmm
sorry i wont shut the door that quickly.
no matter i will press on~!
if i used every commercial EA i would be a brazilianare by next week!!!!
  • #7
  • Dec 22, 2009 11:10am Dec 22, 2009 11:10am
magnumfreak,

Do you mean to include weekend-gaps?
  • #8
  • Dec 23, 2009 4:36am Dec 23, 2009 4:36am
Quoting Chocol8Elvis
hmmm
sorry i wont shut the door that quickly.
no matter i will press on~!

Hi Choco,

I have traded the GBPUSD & USDCHF weekend gap quite successfully, with a TP of 40 & SL 60 pips. It's all to do with statistics. I keep a log of trades and will post it, if you like.
When the gap is down, buy; when the gap is up, sell.

Cheers,


Mike
  • #9
  • Dec 23, 2009 4:45am Dec 23, 2009 4:45am
Quoting doshur
Gap trading exist for a long time already. For forex, it can only take signal from friday close and sunday open thus very less trade.

I have come up with a EA. A very simple one. I believe improvements can be made for a sharper entry.

Pls improve together.

Test the EA with time frame H1
Hello doshur,

Dont you think it would be better for new traders or some new Gap traders if they found all details about Gap Trading Strategy in this thread?
  • #10
  • Dec 24, 2009 5:14am Dec 24, 2009 5:14am
Yeah Blott go for gold Captain!

i too see the weekend gaps and how often it comes back to close the gap. it really is crazy how often the market rejects the gaps, and closes them in a very short time frame...

the only problem i have with this trade set up is that is comes at 5am where i am, and dragging my tired a$$ out of bed at this time on a monday morning is just too hard to focus on the charts!.

hence the bump on this thread, i would love to wake up on monday morning with 50 or potentially more pips in my pj's.....

so a automated EA might be somthing the FF EA creating community may consider in the future, if it doent pose to much burden.....

but Merry christmas Y'all, get some rest from the charts!
if i used every commercial EA i would be a brazilianare by next week!!!!
  • #11
  • Dec 24, 2009 5:39am Dec 24, 2009 5:39am
Quoting Ronald Raygun
magnumfreak,

Do you mean to include weekend-gaps?
yes, even the "gap" from the weekends. That only happens due to your broker. Forex is traded 24/7 and most brokers are only open 24/5.

I always found it funny when people talk about how it "has to close the gap" then they point to price "closing the gap" 4-5 or more days later. Heck there was a "gap" that occurred on October 5, 2008(EURJPY) that still hasn't been closed. How long should I wait??
  • #12
  • Dec 25, 2009 2:47am Dec 25, 2009 2:47am
Quoting magnumfreak
yes, even the "gap" from the weekends. That only happens due to your broker. Forex is traded 24/7 and most brokers are only open 24/5.

I always found it funny when people talk about how it "has to close the gap" then they point to price "closing the gap" 4-5 or more days later. Heck there was a "gap" that occurred on October 5, 2008(EURJPY) that still hasn't been closed. How long should I wait??

well i learnt is Actually open 24/7 out of this thread. but no matter
if the weekend is still being traded by a small pool of traders, it still leaves me thinking that when all the rest of the traders get on thier stations on monday morning, it's still minor gap, so the larger volume of traders and capitol being traded would tell me its actually a gap, even if it diluted from the week end traded some...

i still have some interest in this subject..... not to discount anyones opinion at all, i just choose to investigate all avenues of this train of thought before i dismiss it......
if i used every commercial EA i would be a brazilianare by next week!!!!
  • #13
  • Dec 25, 2009 4:38am Dec 25, 2009 4:38am
Yes. Pls post any materials that is releated to gap trading and we could maybe automated the process.
  • #14
  • Dec 26, 2009 4:27am Dec 26, 2009 4:27am
Quoting magnumfreak
yes, even the "gap" from the weekends. That only happens due to your broker. Forex is traded 24/7 and most brokers are only open 24/5.

I always found it funny when people talk about how it "has to close the gap" then they point to price "closing the gap" 4-5 or more days later. Heck there was a "gap" that occurred on October 5, 2008(EURJPY) that still hasn't been closed. How long should I wait??
15 Hours magnumfreak. (Some people prefer to wait for 24 Hours or at the end of the day, but not me)
Blindly following others will make you blind!
  • #15
  • Dec 26, 2009 4:46am Dec 26, 2009 4:46am
Quoting Chocol8Elvis
well i learnt is Actually open 24/7 out of this thread. but no matter
if the weekend is still being traded by a small pool of traders, it still leaves me thinking that when all the rest of the traders get on thier stations on monday morning, it's still minor gap, so the larger volume of traders and capitol being traded would tell me its actually a gap, even if it diluted from the week end traded some...

i still have some interest in this subject..... not to discount anyones opinion at all, i just choose to investigate all avenues of this train...
GAP trading can be very profitable whether magnumfreak believe it or not.

Whether its the market, the broker or whatever the reason might be i don't care. The Gap is there in every currency pairs every sunday evening(sometimes small gaps sometimes huge gap up to 70 pips).
Blindly following others will make you blind!
  • #16
  • Dec 26, 2009 4:16pm Dec 26, 2009 4:16pm
I like trading gaps as well. As for making an EA though I think there may be to many variables. For instance 1 time this past year it too almost a full week for 1 to fill. A good example of one is attached.

This one climbed to "00" for it to reverse. Promptly filled then went north again.

Rufus
Attached Image (click to enlarge)
Click to Enlarge Name: gap.gif Size: 15 KB
Illegitimi non carborundum - Noli pati a scelestis opprimi.
  • #17
  • Dec 26, 2009 6:43pm Dec 26, 2009 6:43pm
While out with my horse ( He's great for discussing the Fx market with) we were thinking about my last post here.

In short, after a gap is formed it usually needs to run into S/R for it to turn back and fill. Be it a trendline, "00", pivot, etc. So an EA to catch this would be tough. In less of course your EA was Eye Awareness. Sorry couldn't resist. I love working gaps for their pips. The problem I often run into is not being busy with something else when they form.

Rufus
Illegitimi non carborundum - Noli pati a scelestis opprimi.
  • #18
  • Dec 26, 2009 7:23pm Dec 26, 2009 7:23pm
all righty!!

i was just talking about a EA that coult identify the difference between the period and just open the position, and profit target comes say 5 or so pips to the previous close.

ok ok this trade only comes once a week but how may potential pairs are there?
............... all the pairs you choose to trade.

this image still delivered 40 pips even if its only coming close the previous close, good good.i will drag my butt outta bed for this set up and give it a good chance.
if i used every commercial EA i would be a brazilianare by next week!!!!
  • #19
  • Dec 26, 2009 10:04pm Dec 26, 2009 10:04pm
so we have to think of more logic to input into the EA to make it smarter
  • #20
  • Dec 27, 2009 7:08am Dec 27, 2009 7:08am
Hi All,
Hope your festivities were stress-free and you're still speaking with your nearest n dearest!

Before anyone jumps into gap trading, I would suggest they research this method thoroughly and obtain data as follows:- draw vertical lines on every Monday bar on a daily GBPUSD chart, for as far back as you care to go and note which way the gap goes from Friday close. If it gaps down 'pretend' to buy, if it gaps up, 'pretend' to sell. Sometimes the gap is only 1 or 2 pips and you may have to expand your view down to a M15 chart.

With the crosshair tool, look to see how many pips you can get as soon as the bar opens, before you get stopped out; allow for spread.
You could try TP=20-40 & SL either 100 or 60, depending on risk level/choice. Often the gain is in the 100's.
Write the results down so you get a statistical result. Often the gap is "closed" within one or two H1 bars, but can be longer, depending on what the market is doing. You will get losing trades but I haven't come across two consecutive losing trades yet.

USDCHF is also another good currency, due to its large movements. Other pairs will need to be researched separately as they move differently to GBPUSD/USDCHF.

An EA would need to be back & forward tested, with TP, SL & TS variables. The size of gap is not relevant to the size of profit/loss; I have seen many cases where the gap is only 1 pip or less and the gain has been quite large and other times where the gap has been huge and the trade has lost.


Regards,



Mike
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