eToro – Forex Trading Forum

[daranuel]

What is a gap? A gap happens when price closes the week on Friday at a certain price but opens on Sunday at a much different price, meaning there was price action during the off hours over the weekend. The theory says that price gaps must be filled, so many traders will be poised at their buy/sell button at 5pm EST on Sunday when forex brokers open for trading to see if there is a gapped price compared to the closing price.At times the gap can be up to 50 pips. If a major price gap is evident, they will trade in the direction of the gap hoping that price will retrace to close the gap. The USD/CAD is a perfect example of a great gap trade.Priceon Friday 27 june 2008 closed at 1.0110 Price opened at 1.0093, and immediately started ascending in the direction to close the gap, closing price was 1.0111 . It only took one 15minute candles to close the gap for about 10pips. Be aware, price gaps do not always fill, in fact last Sunday a big gap occurred too, and was not filled. But I see these gaps filled more often than not, so do trade them with a good stop loss and you can end up winning much more than losing playing this strategy. Good trading!.

[annet1983]

good advice darranuel!!!