Trading Gaps

This is a discussion on Trading Gaps within the Forex Net Trap forums, part of the T2W Archive category; Hi All, Just thought that I would post up a few examples of trading gaps from a Sunday opening. These ...

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Old Oct 10, 2010, 4:16pm   #1
Joined Jun 2009
Trading Gaps

Hi All,

Just thought that I would post up a few examples of trading gaps from a Sunday opening. These are all from last weekend and were all good pip winners dependant upon when you opened your trade. As I have already posted I only traded 2 of the pairs on that evening, GBP/JPY and GBP/EUR, as GBP/USD had moved to close the gap straight from the opening and I didn't feel it was worth the risk.

In trading a gap you are either looking for a significant gap up or down between the market opening on a Sunday compared to when it closed on a Friday. This gap should be big enough to cover the spread of the cross (e.g. 6 on EUR/JPY) and also give a good potential profit. An example of the gap up is shown on the chart EUR/GBP where we would be looking to take a short position. For a gap down see the chart for GBP/JPY where we would be looking to take a long position.

Again as I have previously posted I tend to wait to make my entry between 21:45 and 22:00 but this is a personal preference and if you want to bang straight in at market opening then go ahead as its your trade. There is a school of thought that you could be missing out on pips but as I have said this is entirely up to you.

One word of caution which I have to mention (not that I want to teach you all how to suck eggs) is that if a cross like EUR/GBP gaps down then the reverse GBP/EUR will obviously gap up. Only trade on one of these crosses at a time as effectively if you were to bet on both then you may as well double up your bet on a single side. As if one cross goes in the wrong way for you (i.e. price moves up on a short) then for the reverse cross price would be moving down where you were trading a long. You would be doubling you potential loss. A thing to look out for though is that on IG I have found reverse crosses to have different spreads so make sure you pick the cross that fits better with this type of trade.

As I have said in my previous posts I have successfully traded this since February but I have had some howlers as well. I would recommend that you set a target and go for it. I have had quite a few trades where the gap has closed by a single pip only for price to reverse and go in the other direction. This is why I tend to set a target and stick to it, I know you can put trailing stops on etc and in some cases price can go on and on in a trend but I guess that I am not that adventerous.

Anyway, I will be on here at 9pm and I will post the gaps that I see (if any as this does not happen every week). I won't be giving advice as to what to trade as this is entirely up to you.

If you have any questions then please feel free to PM me.

Catch you later,

Neil
Attached Thumbnails
eur-gbp-03-10-10.jpg   gbp-eur-03-10-10.jpg   gbp-jpy-03-10-10.jpg  

gbp-usd-03-10-10.jpg  
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Old Oct 10, 2010, 5:05pm   #2
Joined Aug 2010
Re: Trading Gaps

Nice one Neil for the extra clarification- i caught your post mid last week actually and tried the "gap trade" for the first time last Sunday - did one trade on GBP/USD where i think there was a 35 pip gap from memory - i set my limit at 25 and banked it fortunately- i was well chuffed with this first attempt so will definitely be looking for more of the same - thanks for the heads up on this potential weekly opportunity
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Old Oct 10, 2010, 7:46pm   #3
JRJ
Joined Feb 2010
Re: Trading Gaps

yes thanks Neil, i will be watching tonight..unless the very small amount of wine takes it's toll.... that's the prob with Sunday eve trade... too relaxed.
J
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Old Oct 10, 2010, 9:06pm   #4
Joined Jun 2009
Re: Trading Gaps

Slopius_jim started this thread Hi All,

Well its looking like there are some good gaps to trade tonight. All the figures are on IG index.

EUR/JPY (6 pip spread)
EUR/GBP (3 pip spread) and the reverse GBP/EUR (6 pip spread)
AUD/USD (5 pip spread)

GBP/AUD has a large gap as well but I don't usually trade this due to the spread of the cross (15 pips).

Neil
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Old Oct 10, 2010, 9:08pm   #5
Joined Jun 2009
Re: Trading Gaps

Slopius_jim started this thread
Quote:
Originally Posted by Slopius_jim View Post
Hi All,

Well its looking like there are some good gaps to trade tonight. All the figures are on IG index.

EUR/JPY (6 pip spread)
EUR/GBP (3 pip spread) and the reverse GBP/EUR (6 pip spread)
AUD/USD (5 pip spread)

GBP/AUD has a large gap as well but I don't usually trade this due to the spread of the cross (15 pips).

Neil
Sorry also forgot EUR/USD which has a massive gap.

Good luck all.
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Old Oct 10, 2010, 9:11pm   #6
 
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Re: Trading Gaps

Cheers Neil. gone for EUR/GBP short, from 65 to 45, 20 pip TP/20 SL. Let's see.
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Old Oct 10, 2010, 9:32pm   #7
Joined Jun 2009
Re: Trading Gaps

Slopius_jim started this thread Anyone in yet? As you can see its pretty much trending sideways. I am going to be making my entries at about 21:45.
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Old Oct 10, 2010, 9:33pm   #8
Joined Sep 2010
Re: Trading Gaps

I've gone short on EUR/USD and long on GBP/EUR. Both had a 50 pip gap. ( Approximately )

Graham
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Old Oct 10, 2010, 9:40pm   #9
Joined Mar 2009
Re: Trading Gaps

Quote:
Originally Posted by Slopius_jim View Post
Sorry also forgot EUR/USD which has a massive gap.

Good luck all.

Hi
I am looking only the charts with interest, because my Tradefair account have all markets closed now http://www.trade2win.com/boards/imag..._new/icon9.gif
I can see all the gaps you say with 40 or more pips difference, and also EUR/CHF with about 26 pips gap.
Are you using IG for trading? Do you know another company to trade suitable for this strategie and with lower spreads?
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Old Oct 10, 2010, 9:42pm   #10
Joined Sep 2010
Re: Trading Gaps

Antonio
Yes I'm using IG.
Graham
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Old Oct 10, 2010, 9:46pm   #11
Joined Jun 2009
Re: Trading Gaps

Slopius_jim started this thread
Quote:
Originally Posted by antonio2010 View Post
Hi
I am looking only the charts with interest, because my Tradefair account have all markets closed now http://www.trade2win.com/boards/imag..._new/icon9.gif
I can see all the gaps you say with 40 or more pips difference, and also EUR/CHF with about 26 pips gap.
Are you using IG for trading? Do you know another company to trade suitable for this strategie and with lower spreads?
Hi Antonio,

I have only used IG and Tradefair so I really don't know what other platform you could use.

Regards,

Neil
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Old Oct 10, 2010, 9:49pm   #12
Joined Sep 2010
Re: Trading Gaps

Neil
What stops do you normally use?

Graham
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Old Oct 10, 2010, 9:51pm   #13
JRJ
Joined Feb 2010
Re: Trading Gaps

anyone using guaranteed stops? perhaps makes the spreads too wide?

Last edited by JRJ; Oct 10, 2010 at 9:57pm. Reason: slow
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Old Oct 10, 2010, 9:54pm   #14
Joined Jun 2009
Re: Trading Gaps

Slopius_jim started this thread
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Originally Posted by GRAHAM N View Post
Neil
What stops do you normally use?

Graham
Usually 15 - 20. Depends on the cross.

Regards,

Neil
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Old Oct 10, 2010, 9:58pm   #15
Joined Mar 2009
Re: Trading Gaps

In other thread Mark say he will be this night trading the gaps, looking IG charts and then opening trades in Smart Live Markets at 10.00 (when SML open trading).
Will be very interesting, because SML has low spreads
Hi Mark, are you here? Can you confirm if SML admit trade amounts with cents and under 1.00 ? And how much is the minimun difference betwen entry price and SL-TP?
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