How Does This Type of Gap Happen? | Forex Factory

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How Does This Type of Gap Happen?

  • #1
  • First Post: Aug 10, 2012 4:08am Aug 10, 2012 4:08am
I understand that you have gap opens at the start of a new week because we're locked out of weekend action as retail traders....but how do gaps like the one pictured below happen from the close of one candle to the open of another?

I found this while going through the E/U chart in strategy tester for Oct 7 2011. It's happens between the 10:15 candle and the 10:20 candle. I don't get it. Doesn't one candle have to pick up where the precious leaves off?

http://img854.imageshack.us/img854/4...egapcandle.png
  • #2
  • Aug 10, 2012 4:47am Aug 10, 2012 4:47am
Quoting FXAssassin
I understand that you have gap opens at the start of a new week because we're locked out of weekend action as retail traders....but how do gaps like the one pictured below happen from the close of one candle to the open of another?

I found this while going through the E/U chart in strategy tester for Oct 7 2011. It's happens between the 10:15 candle and the 10:20 candle. I don't get it. Doesn't one candle have to pick up where the precious leaves off?

http://img854.imageshack.us/img854/4...egapcandle.png
most of the time the simplest answer is the right one: Bad feed.
  • #3
  • Aug 10, 2012 5:09am Aug 10, 2012 5:09am
Quoting Custos
most of the time the simplest answer is the right one: Bad feed.
  • #4
  • Aug 10, 2012 6:11am Aug 10, 2012 6:11am
...

or simple that the prices in between were not available.
That can easily happens.

J.
.
  • #5
  • Aug 10, 2012 6:23am Aug 10, 2012 6:23am
Yeah .. strange jump ... maybe a tear in the space-time continuum ... or a news announcement or a bad feed indeed.

FXAssassin, check with another feed.
Quoting jeuro
...

or simple that the prices in between were not available.
That can easily happens.

J.
.
forget about tomorrow, just steal away into the night
  • #6
  • Aug 10, 2012 6:42am Aug 10, 2012 6:42am
sometimes, it happens when you have poor internet connection. Just refresh the chart or try to download history manually.
When Scalpers win, I lose and Vice varsa...
  • #7
  • Jan 6, 2013 4:44am Jan 6, 2013 4:44am
GAPS?
It is a good question - specifically how do opening gaps happen?
Does the 'Market' see the price at the 'close' as incorrect and opens with a gap to correct it?
Market Makers (people) are responsible for gaps in stocks but to my knowledge there are no market makers in FX, commodities etc.
I guess that there could be a central computer somewhere assessing buy and sell orders but if that were correct someone would know who runs it.
I don't know the answer so I would seriously like to see a reply from any who does know.
Happy New Year
George
  • #8
  • Jan 6, 2013 10:39am Jan 6, 2013 10:39am
Quoting 2george
GAPS?
It is a good question - specifically how do opening gaps happen?
Does the 'Market' see the price at the 'close' as incorrect and opens with a gap to correct it?
Market Makers (people) are responsible for gaps in stocks but to my knowledge there are no market makers in FX, commodities etc.
I guess that there could be a central computer somewhere assessing buy and sell orders but if that were correct someone would know who runs it.
I don't know the answer so I would seriously like to see a reply from any who does know.
Happy New Year
George

Have you looked this up yourself? I think investopedia has a nice video explaining the gap.
Play the players, not the cards.
  • #9
  • Jan 6, 2013 11:23am Jan 6, 2013 11:23am
Quoting 2george
GAPS?
It is a good question - specifically how do opening gaps happen?
Does the 'Market' see the price at the 'close' as incorrect and opens with a gap to correct it?
Market Makers (people) are responsible for gaps in stocks but to my knowledge there are no market makers in FX, commodities etc.
I guess that there could be a central computer somewhere assessing buy and sell orders but if that were correct someone would know who runs it.
I don't know the answer so I would seriously like to see a reply from any who does know.
Happy New Year
George

Hello George, happy new years.
Gaps are quite common when our Brokers are closed and are not taking any orders.
In spite our Brokers are closed for business, currency exchange is still happening around the world and the quotes
could change during that time... actually to me, it is more amazing that they do not happens that much.

It is simple... at the end of the week our Broker stop quoting at certain prices...fill last orders at those prices and stop
taking orders.... at the opening, when they start taking orders again, they quote at whatever price they can get for us
in the open market.

I am guessing that the majority of Banks find a whole bunch or order sitting in their systems from the weekend exchangers
and they adjust their quotes accordingly to start filling new orders.

Every bank probably do it in an individual basis, there is no central computer doing anything.. but most likely everybody adjust
their quotes in a couple minutes after opening... I mean no Bank in the World want to be off quotes and get their ass kicked by somebody else
with a fast arbitrage. That is why most Banks and Brokers quote right from the start, but in those first 2 minutes almost never fill orders if the world consensus and quotes are different from the prices at close. They just wait until thing settle down to start filling.

Forex is such an efficient market that takes only 1 or 2 minutes to adjust, and if that price settle a few or more then a few pips from closing
all brokers will show a a gap in their charts (not necessarily the same in all brokers) ... which reflects the last price they "took" orders and the new price they "take" orders after being closed for business.

J
.
  • #10
  • Last Post: Jan 7, 2013 10:39am Jan 7, 2013 10:39am
Quoting jeuro
Hello George, happy new years.
Gaps are quite common when our Brokers are closed and are not taking any orders.
In spite our Brokers are closed for business, currency exchange is still happening around the world and the quotes
could change during that time... actually to me, it is more amazing that they do not happens that much.

It is simple... at the end of the week our Broker stop quoting at certain prices...fill last orders at those prices and stop
taking orders.... at the opening, when they start taking orders again, they quote at whatever...
also depending on what bucket broker we use,they dont all start at the same times,my ig opens earlier than my alpari so that would show as a gap but not so there behind the price.this is why when our brokers open there systems the first couple of hours can be traded in a way which capitalizes on these adjustments as comes back and forth to clear orders. unfortunately my broker widens the spread recently ,oh well not everthing last forever.

i still do somthing similar on ftse100 ,although the market closes at 4,my spread bet account still tracks price ,so on market open theres a hint of information of where it may trade back to to fill.if you watch cnbc they often refer to markets like the ftse using the spread betters as the open price.lots of information from such things
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