POLL: Do you trade The Gap?

This poll is anonymous.

Do you trade the gap from market close to market open? (for me, this is Friday afternoon to Sunday afternoon)

I fade Sunday gaps. But take profit quickly. And set tight SLs.

trying to trade the gap beforehand is gambling dude. you literally only have two choices. and the gap can go way below your stop loss if you set it wrong. its fun to do, and you might make some money if you place a trade on a bunch of different pairs and guess right on most of them, but it isn't trading.

I don't trade beforehand, after the Sunday open, if there is a significant gap.

There are no Gaps in the Forex Market.
Depending on when your Broker starts and ends its feed you Gap could look completely differnt from broker to broker.

I've been using GFT Dealbook Web for about 2 years, and fading the Sunday gaps shown on the smaller TFs on this platform has been good solid method for me. In fact looking back at my personal journal, if I had just stuck to this method and no others, it would have saved myself a lot of time and headache. And I'm sure this can be said about many other methods on this site as well, it just comes down to what fits your personality.

There are no gaps in the real fx market. Gaps are defined by your broker only ... a gap is nothing more than your broker turning off their data feed at a closing price for the weekend and turning it back on Sunday at the current price at which the market was trading at through the weekend. This also explains why all brokers "gaps" are different in price, in fact while some brokers show gaps others may not.

In the real world, the fx market never closes. Weekend markets are slow but there is business being done and with this tells us there are no such things as gaps.

Like I said its just a product of your brokers feed. If you try a dbFX Demo (which opens really early) you will notice that most of the smaller gaps (on other brokers) are actually regular price action and are not gaps at all.

I do understand what you are saying, and I'm not arguing that gaps exist, I'm just pointing out what I see visually on this particular platform from week to week, and how I react to it.

Understandable. Part of the reason why pro traders don't trade gaps is that we know they don't exist. Traders who play orders on weekend positions without knowing the Sunday outcome are traders playing Russian Roulette. Pro traders don't like the odds stacked up against them with this this of game, hence we stay far away from the table. In addition, we don't like Broker's games ... and in a way gaps are considered a brokers game. The only one that knows the opening price of weekend trading is the broker, so tell me how are the odds stacked against you with this gaps game? The answer: tremendously!

It's no secret that brokers can skew price in their direction. If retail traders had access to weekend trading data ... then trading the gaps would be a very viable and possibly profitable weekly strategy. The playing field would be level and any pro trader worth his weight would probably trade gaps, but this is not how things are today. We retail trades don't have access to weekend trading data and charts so trading something on a hunch is not the smart way to trade, especially when there is literally 0% chance things will go in your favor. Because once you place that weekend order on Friday it's all up to your brokers ethics to do the right thing. And if you think stop protection orders will save you from loss, it will not. I've seen gaps pass right over stops 300 pips away. Too much risk for a lot of "what if" possibility.

Hi Jhig,

I appreciate the feedback. I am actually not placing the trade on Friday, I'm placing it after the open on Sunday. I apologize for any confusion here.

Ohhh ... then you aren't gap trading, you are trading the price on Sunday's opening. Gap trading is leaving a postion (market, limit, stop) open over the weekend in hopes of collecting profits from the gap.

That's not gap trading. That is gambling and tying to predict the unknown and unknowable future. It's risky and has no edge.(I think you actually were making this point).

Gap Trading involves using a disciplined approach to take advantage of certain parameters that create an edge. An edge which is derived from or created by the existence of a gap.

TRADE WHAT YOU SEE.

Whether or not gaps exist, a trader has to trade what he sees. If you don't trust your data provider, find a new one or trade another instrument.

From my perspective the proper way to play gaps is to first understand that gaps represent changes in the supply/demand dynamic in the market. Because a gap represents an Known area of change in the market, it becomes an ideal place to look for trade signals. The question is what does the price action reveal after the gap? However, if you are an indicator trader, the question shifts to "what is your indicator(s) saying after the gap"?

Take a look at the chart below. Sunday's gap was an interesting one. The price action immediately after the gap told me that a "fade" trade was not the way to play it. Knowing that there had been a change in the supply/demand dynamic, I was looking to take a signal within the area of the gap (until filled). As it happens, this gap came in the area of two previous S/D zones. By itself that does not mean much, but if gaps don't exist this trade still sets up because it is also within a S/D zone created by a WRB.

Basically a nice bearish engulfing pattern appeared within the area of the gap (and another S/D zone). Price does fall and as of the time of the post has not yet filled the gap. As long as the gap remains open, one can look for entry signals within it and in either direction.

Gaps matter to the BBs (Big Boys) because they are changes in the supply/demand dynamic. That makes them ideal areas to look for trade signals. The question of whether or not the gap exists can only be answered this way: It does or it does not, but one can only trade what he or she sees. Again if there is doubt and mistrust of the data (gap), change data providers or markets traded.

No gaps in the FX market ?! You better get a proper broker guys.

Wrong.

There are gaps in fx just like any other market. The question is whether there are OPENING gaps in the fx market.(i.e. Friday's close to Sunday's open).

Agreed,

Gaps occur less in Forex cos the market and the brokers are open 24/h for 5 days a week.
A gap occurs because when the market is closed, the world goes on and so some events, that move the price, occur.

Lubo.

Of course there is, thats what I meant.

Thank you for this detailed explanation of your method and philosophy about 'trading the gap'. Very interesting indeed!

Gaps illustrated.

http://www.forexfactory.com/showpost...postcount=5115
http://www.forexfactory.com/showpost...9&postcount=48

Anyone works with gap patterns??