What is Gap and how it happen?

[forker]

Am sorry but I totally disagree......

Time after time people with posts counts of 5 10 or 20 etc ask questions that are consistently ridiculed by invariably the same posters....

Clearly by me receiving 4 PM's telling me exactly the same by members who are established than its not just me who's noticed it......

I hope the owners of the site have as well.......

Why do you care or why does post counts matter to you. Thats the kind of predilection expected from teenagers. If you dont like the forum banter,then you know where you can go. Many of the people you refer to have been here much longer than you and will still be here when you've been long forgotten about.

 

[jungerns]

Why do you care or why does post counts matter to you. Thats the kind of predilection expected from teenagers. If you dont like the forum banter,then you know where you can go. Many of the people you refer to have been here much longer than you and will still be here when you've been long forgotten about.

Again someone completely missing the point I suspect deliberately......

Not in the slightest interested in a post count-in fact your admin actually emailed me a few days ago with the claim "we are missing you" no doubt the same email sent to all........

Hadn't bothered coming on for couple months purely for the reasons outlined but thought I'd give it a go again, but as expected nothing had changed...

Its a real shame..

 

[Patricia12]

Patricia, a link to a decent explanation on gaps in fx:

Liquidity Gaps and Spike Removals | No Brainer Trades

There's more on gaps on that site, have a look about.

Thanks rsh01 to share this site. It is packed with useful information for me.

 

[Patricia12]

My query "What is Gap and how it happen?" was in my mind last some days and I was planning to ask in any trading forum. I am familiar with some other trading/forex forums as well but decided to ask here. As there are number of senior members active and it is one of the best trading forums.

It is my first thread. I got some really useful reply (from rsh01), commented, argument and some argument between members as well.

It is more than expectation. Thanks to all members for replying here.

 

[wallstreetwarrior87]

From where I'm standing, you've misunderstood each and every concept you've touched on in that post.

How so?

Genuinely interested in why I have misunderstood the concept.

As you can tell I base my thoery that gaps are NOT random, and I stated that a questioning process can begin from there.

Of course I could have just stated the obvious that a gap is created when there is no mid-priced traded through.

Also depending on timeframe viewed some gaps do not even appear, even though they do exist. So traders using an hourly chart will not see gap created on a 1 minute chart (unless it is created on the first 1 minute bar of a new 60 minute bar).

So if we go back to Patricia's question about weekend forex:

Who decides the opening bid/offer at the open on the Sunday evening (UK time)?

 

[scose-no-doubt]

How so?

Genuinely interested in why I have misunderstood the concept.

As you can tell I base my thoery that gaps are NOT random, and I stated that a questioning process can begin from there.

Well for one I think you've completely misunderstood the whole premise of the academic basis for short term randomness in markets. There's plenty of studies out there on the basics of EMH and application of the principles of randomness to market prices so I'm not going to go through it in here (and I lack a deep enough understanding to feel comfortable preaching on the subject anyway) but suffice it to say that as far as I'm aware, I don't think that anyone, anywhere believes that gaps, in isolation, are random.

Of course I could have just stated the obvious that a gap is created when there is no mid-priced traded through.

Also depending on timeframe viewed some gaps do not even appear, even though they do exist. So traders using an hourly chart will not see gap created on a 1 minute chart (unless it is created on the first 1 minute bar of a new 60 minute bar).

I think there is problem in relying on charts and candle sticks or other types of OHLC graphic to assess gaps

So if we go back to Patricia's question about weekend forex:

Who decides the opening bid/offer at the open on the Sunday evening (UK time)?

I don't really see the point of that questions. It's kind of like asking who decides any bid/offer at any time.
If you mean how do market makers generate bid/offer prices over the weekend I can't tell you that. You'd probably be best asking someone with institutional experience to tell you that. I'd assume it's a matter of market makers dealing with open orders and adjusting the pricing mechanism to reflect any ECN transaction activity. There are also regulatory issues concerning what bids/offers they have to quote.
I'd assume that the pricing difference (whether speculative activity or not) would be the result of some sort of highly quantitative witchcraft that's beyond me or possibly econometric modelling adjusting for event or interest rate risk, carry and the like.
If you have a read of the alchemy of finance, Soros talks about some very simple but interesting currency models. My opinion, as a layman, is that I doubt they'd be anywhere near 100% applicable to today's market but they give you some insight into the rationale and considerations of those that can move the markets.

If anything, the fact that prices continue is a bit of a testament to the fact that previous prices are not indicative nor do they have the power to predict future prices which brings me back to the first point and round we go again.

I'm don't have anywhere near the technical proficiency required to address these issues with any degree of significance but if you go digging you'll find empirical and theoretical research on all of this stuff. It's all very interesting and will probably lead to more questions than answers.

Love,

Teh Scose

:clover:

 

[TraderNumber7]

I came through this statement "Gaps happen when the forex market closes and the forex market have some movements before the market opens."

How does market movement measure before market open or after market close?

Please also share details about "Gap and how it happens".

Patricia,

The axiomatic phrase has always been: "All Gaps Get Filled." That's an actually Market Theory, that some people use to place certain kinds of trades.

I've designed and built an entire Bot around this Market Theory. One of many Bots over the past several months. I guess you can say that I've gone on a Bot spree, lately.

Anyway, the basic fundamental idea is that you enter a position in the "opposite" direction of the gap and then wait for said gap to close, or get filled. Of course, this sounds too good to be true and guess what - it is. It depends on a number of "other" technical factors that are key to understanding why some gaps get filled, while others do not. You also have to pay attention to the Time Frame that you select for gap monitoring. This plays a very important role in figuring out WHEN your gap will get filled.

As with all things relative to trading: Timing, Direction, Magnitude and Probability (especially with gaps) are the four (4) most vital pieces of information that you must have an understanding about, before entering any trade.

I just put together the last "awareness" video about the CFx. I'll be discussing Bot designs and non-standard custom indicators - if you find that kind of stuff interesting. It is for educational, non-commercial purposes only. The site will be all about how a trader can go about developing a trading system that works for them.

Hope this helped! Enjoy.

 

[alphadude]

TraderNumber7; what's your site url?

 

[TraderNumber7]

TraderNumber7; what's your site url?

CollaborativeFx.forumer.com.

I'm actually StealthTrader. That's the original UID I've used since I first began posting online about trading, more than 10 years ago.

The site won't be reopened until I finish the first multi-bot system named: Saturn V1.0. It will contain up to seven (7) EAs, depending on how the integration and optimization results turn out - which is the work I'm doing right now.

A Bot has to be able to do one thing: Make profits in all directions, no matter what direction the market moves.

If you can build that - then you are pure gold in this business. That's my goal and that's what the CFx will be all about - giving people a narrow look behind the curtain at how I go about doing it.

For educational purposes only. I don't work for anyone. I don't trade money for anyone. I don't build bots for anyone and I do not sell anything. The CFx is meant to hopefully inspire new traders and show them what's possible, if they start thinking Outside The Box of Convention.

Cheers.

 

[alphadude]

if you don't mind me asking; are you profitable trader; and for how long?

 

[TraderNumber7]

if you don't mind me asking; are you profitable trader; and for how long?

10+ years total including:
- Gained over $2.5k trading stocks and options
- Lost over $25k trading stocks and options
- Switched to Fx between 2001/2002
- Lost over $8k trading currency pairs
- Solidified new indicator designs in 2003
- Designed and built final version of prototype trading system through 2008/2009/2010
- Moved $1,500 into eight (8) digit territory from 2009 through today.
- Currently evaluating core indicators against lower time frames for possible OOP transformation.

Primary Goal:

- Manage a home grown private portfolio (LLC) valued between $2 - $3 billion on a daily basis.

Time Table:

- ETA 3-4 years.

Confidence Level (1-10 with 10 being Absolute Certainty)

- 7.5 as of today.

If the lower time frame work being done right now (The CFx project) turns out to have the value that I think it can, then the confidence level will be no less than 8.5 and probably reach as high as 8.9.

Successful Trading to you!

Follow the re-opening status of the CFx on Twitter @CollaborativeFx.

Regards,
T7

 

[forker]

1500 to over 10 million in 3 years....?

 

[Splitlink]

Yes you're right I have a legendary member but it means absolutely nothing in this place. You should really stop asking questions like this here. Go and buy a book. You'll learn more from reading a book for a day than you will posting here for a month.

Very true. The number of posts, not knowledge, defines legendary status on this site. I'm, naturally, gabby! The problem with books, though, is that one can buy a lot and they all cost money (and time to read) to get what one is looking for.

The best book is one that is full of charts. "Schwager on Futures--Technical Analysis" published by Wiley is one of my favourites.

He specifies gaps as common , breakaway, runaway and exhaustion.

 

[alphadude]

1500 to over 10 million in 3 years....?

Let him dream. he is trading the left side of charts just like any noob

If baghdady could do it this guy can. he must be a BagTurtle or something

 

[angelnish]

Very true. The number of posts, not knowledge, defines legendary status on this site. I'm, naturally, gabby! The problem with books, though, is that one can buy a lot and they all cost money (and time to read) to get what one is looking for.

The best book is one that is full of charts. "Schwager on Futures--Technical Analysis" published by Wiley is one of my favourites.

He specifies gaps as common , breakaway, runaway and exhaustion.

:smart:

I fully agree with you.