Trading Gaps

This is a discussion on Trading Gaps within the Forex Net Trap forums, part of the Specialists' Corner 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
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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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Joined Feb 2010
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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