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Trade the Gaps... oh You Idiots

  • #21
  • Jun 5, 2012 3:05am Jun 5, 2012 3:05am
And the same kind of Support / Resistance setups as talked about in the video. ( 15 min timeframe here)
Attached Image (click to enlarge)
Click to Enlarge Name: EuroGap2.JPG Size: 63 KB
  • #22
  • Jun 5, 2012 6:42am Jun 5, 2012 6:42am
its not a question of just seeing a gap and filling it,also what exactly a gap is,be it liquidity gap ect,if you choose to study this very large topic and apply some method of trading ,you will discover it has a number of effective edges within it.i have one entire method using gaps,but not on forex,although i use gaps in forex in a slightly diferent way ,as they are not so visible on fx charts.

the best veiw point is on a 1 second chart,thats a fascinating way to veiw price,visually watching the quotes,some would argue that this is all irrelevent as its just one brokers feed .but this represents the average.watch the price fill the voids watch the pattern of price,theres so much information on what phase price is currently going through. from this veiw point expand outwards .you will be astonished what you discover regarding how price behaves.

as i said on the other gap thread,its a huge topic,but if you look deeply enough into it you will find many ways to capatalise from it
  • #23
  • Jun 5, 2012 7:18am Jun 5, 2012 7:18am
Quoting 2+2=4ex
This guy is awesome at picking entry points on charts of the past.
1 He is explaining a concept offcourse he would use the price of the past.
2 Fortunately he is not a salesman, in his rare sparetime he takes the time to
introduce new ideas.
3 While you're posting thousand of comments on FF this guy is busy making above benchmark returns on his investment fund.
4 Am I mad? Yes, I hate people that discredit other peoples effort.
  • #24
  • Jun 5, 2012 7:28am Jun 5, 2012 7:28am
Quoting pt49
post you thoughts on Gap trading,.
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whether they exist or not, i quite often trade sunday market opening gaps..... but only if certain mandatory conditions are met..... and have done this for years.....

the historical gap closure % is easily obtained, along with time taken, maximimum excursion, drawdown, until the closure.....

and of course the exact same historical information can be derived for almost any other entry and exit.......

//---
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it still amazes me how quickly battle lines can be drawn when certain terms are discussed...... prefer not to get drafted so my final word would be, in my experience, when trading sunday gaps the risk to reward is higher .....h
to trade and code, keep both simple... no call to impress....h
  • #25
  • Jun 5, 2012 7:29am Jun 5, 2012 7:29am
thclosed second half of cable trade at 15815 level,that was my exit very similar to a short last week ,if u look at the long blue upcandle from overnight on the greek news about 40 pips i think,well that as ive said before is almost like a large gap,low liquidity ,its a 2 min candle,so my exit was based on that low liquid long candle to fade it,or fill the hole,one of the easier scalps,33 pips secon half ,20 pips first half,
my move is finished but thats not to say theres not more downside,but i dont know,hope it makes sense to sombody
Attached Thumbnails http://www.forexfactory.com/attachme...1&d=1329820018
is is from my journal and ilistrates one use of gaps,from the many,
  • #26
  • Jun 5, 2012 7:51am Jun 5, 2012 7:51am
Quoting swingtraderf
1 He is explaining a concept offcourse he would use the price of the past.
2 Fortunately he is not a salesman, in his rare sparetime he takes the time to
introduce new ideas.
3 While you're posting thousand of comments on FF this guy is busy making above benchmark returns on his investment fund.
4 Am I mad? Yes, I hate people that discredit other peoples effort.

Agree totally, steve w is clearly an excellent trader and still has one if not the best thread on this site for sure
tradewith60
  • #27
  • Jun 5, 2012 7:53am Jun 5, 2012 7:53am
Quoting diceman555
thclosed second half of cable trade at 15815 level,that was my exit very similar to a short last week ,if u look at the long blue upcandle from overnight on the greek news about 40 pips i think,well that as ive said before is almost like a large gap,low liquidity ,its a 2 min candle,so my exit was based on that low liquid long candle to fade it,or fill the hole,one of the easier scalps,33 pips secon half ,20 pips first half,
my move is finished but thats not to say theres not more downside,but i dont know,hope it makes sense to sombody...
tradewith60
  • #28
  • Jun 5, 2012 2:21pm Jun 5, 2012 2:21pm
I was going to leave this thread alone, but it seems to have generated a little interest.

For me, there are two main types of gaps: 1. Actual 2. WRB Hidden Gaps

Clearly the original poster is referring to Actual gaps. In fact, his premise is that those Sunday gaps are not Actual. I do not agree with that premise, but rather than refute it directly, I will discuss how I trade them.

It's simple really. Most traders who trade gaps are trading them with the assumption that "gaps are filled". Therefore if the market gaps up on Sunday, they would be looking to get short playing for a fill of the gap.

For me, if the market gaps up on Sunday then the gap represents a change in the Supply/Demand Dynamics in the market. Some here have used the term "liquidity gap". That's fine. To me the key is that this gap represents a change in Supply & Demand in the market. Moreover, this gap represents an area where the Big Money has been active. Believe me, if the market gaps on Sunday it is not due to small retail traders making trades. The big boys are behind it.

So what do I want to do? The same thing I do with WRB Hidden Gaps that are key changes in the Supply/Demand Dynamics. I want to look to take trades in these areas because these areas are where the Big Boys were once active and are likely to be active again. Rather than looking to take a "fill the gap" trade, I am looking to take a trade within the gap prior to it filling.

So if we have a gap opening on Sunday, I would not be looking to short price into the gap. Rather I would be looking for price to come down into the gap and then give a long trade signal. If the gap fills prior to me getting a trade signal, no harm no foul.

If you want to know whether there are truly weekend gaps or not, it is easy to measure how well your trades perform when taken in the area represented by the gap versus trades taken in "air".
Without VSA, you're playing checkers while the Smart Money plays chess.
  • #29
  • Jun 5, 2012 3:19pm Jun 5, 2012 3:19pm
Quoting HiddenGap
I was going to leave this thread alone, but it seems to have generated a little interest.

For me, there are two main types of gaps: 1. Actual 2. WRB Hidden Gaps

Clearly the original poster is referring to Actual gaps. In fact, his premise is that those Sunday gaps are not Actual. I do not agree with that premise, but rather than refute it directly, I will discuss how I trade them.

[color=black][font=Verdana]It's...
Any movement in price at anytime is due to a change in the supply/demand balance. The trading continues over the weekend, we're just not able to access the market through our brokers, hence the gap.
tradewith60
  • #30
  • Jun 5, 2012 3:34pm Jun 5, 2012 3:34pm
Quoting swingtraderf
1 He is explaining a concept offcourse he would use the price of the past.
2 Fortunately he is not a salesman, in his rare sparetime he takes the time to
introduce new ideas.
3 While you're posting thousand of comments on FF this guy is busy making above benchmark returns on his investment fund.
4 Am I mad? Yes, I hate people that discredit other peoples effort.
Jesus man it was a joke, relax. I thought the smelly finger emoticon () gave it away.
  • #31
  • Jun 5, 2012 4:35pm Jun 5, 2012 4:35pm
Quoting 60minuteman
Any movement in price at anytime is due to a change in the supply/demand balance. The trading continues over the weekend, we're just not able to access the market through our brokers, hence the gap.
That seems like a fairly lame reply to an excellent post. Or maybe you just missed the whole point.

Either way, have a great day.
When the Joker is in the deck.. fear not and play it well
  • #32
  • Jun 5, 2012 4:46pm Jun 5, 2012 4:46pm
Quoting Slim Buffett
That seems like a fairly lame reply to an excellent post. Or maybe you just missed the whole point.

Either way, have a great day.
yeah i'm feeling lame today...must be the double bank holiday.

Besides my point was best expressed in the video link i posted, theres no mystery in gaps, theyre sudden movements in price and there is a vested interest in them closing for certain instituitions, namely brokers
tradewith60
  • #33
  • Jun 5, 2012 4:58pm Jun 5, 2012 4:58pm
Quoting 60minuteman
Any movement in price at anytime is due to a change in the supply/demand balance. The trading continues over the weekend, we're just not able to access the market through our brokers, hence the gap.
Granted but not all changes in price and therefore the supply/damand balance are significant or key.

Futures lead Spot and Futures do not trade of the weekend. So gaps must exist.
Without VSA, you're playing checkers while the Smart Money plays chess.
  • #34
  • Jun 5, 2012 5:10pm Jun 5, 2012 5:10pm
Quoting HiddenGap
Granted but not all changes in price and therefore the supply/damand balance are significant or key.

Futures lead Spot and Futures do not trade of the weekend. So gaps must exist.
agreed, but futures also has a central exchange too, so some slight differences..

anyhoo, i agree with your thesis, Walter jake trades gaps in a similar style, he calls them belt trades.
tradewith60
  • #35
  • Jun 5, 2012 7:15pm Jun 5, 2012 7:15pm
Quoting 2+2=4ex
Jesus man it was a joke, relax. I thought the smelly finger emoticon () gave it away.
By using the emoticon it seemed like you were offending the presenter, calling him a lunatic. I misunderstood you but I have had people attacking someone who was sharing his ideas while he owed them nothing.
  • #36
  • Jun 6, 2012 6:09am Jun 6, 2012 6:09am
Quoting HiddenGap
Believe me, if the market gaps on Sunday it is not due to small retail traders making trades. The big boys are behind it.
They're indirectly so. The whole point of the liquidity gap is that A) price wanders within bounds the institutional traders created, B) the direction of price is according to the symbol's current news interest to traders, and C) the type of time traded in suggests how the symbol is to be traded.
A) makes the institutional traders irrelevant during the trade.
News is built into price in forex enough to ignore if want, and price is continuous enough so chart technicals can replace news. Thus, one can avoid selecting a symbol to select, in B).

That leaves C).

The weekend is by far the most regular build-up of stop orders (from what I read) in forex pairs, so a gap fill (I've read 80%) is the easiest pattern to describe its action after its illiquid time.

I don't think it's a build-up of new orders also, as the post above may suggest, because an active session isn't due until Monday.
The post above's idea of preparing for a continuation of direction for price after a possible gap fill, until the next active session, does make sense.


It's easier still, though, simply to use a technical reason for any price and ignore liquidity,
rather than deal with nonstandard volume to read liquidity, unless you use low-liquidity sessions, weekends and holidays as tests of continuation of price patterns set in high liquidity.
  • #37
  • Last Post: Jun 17, 2012 12:45pm Jun 17, 2012 12:45pm
Quoting Razvan
Gaps DO NOT exist for the MARKET. Trading takes place during weekend too and if you have a good broker(yeah that takes more then 100$) you can trade during weekend too.

That being said...anybody who trades gaps after reading this deserves to lose all his money.
Razvan.. Ive been around this business for a time now. I dont trade Gaps, but three years ago did a lot of research on that approach, and have a close colleague that makes a lot of money from Gap Trading.

But obviously you have a lot more experience? So Im very interested in the data on which you base your view. And also what broker/Bank do YOU use that allows you to trade through the weekend?
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