Is Gap Trading in Forex Profitable? | Forex Blog | cozosen.web.fc2.com

August 28, by Hugh Kimura. Forex gap trading can be a profitable trading strategy, if you know what you are doing. The purpose of this post is not to teach you one way to trade it and say that is the only way.

I'm going to show you several different methods and allow you to choose the one that works best for you. I will also show you how to test these different strategies, without risking any real money. They are easy to spot and can be traded with a rule based system.

I'm going to skip the normal, definitions that you can read on any other website. Hopefully these definitions are more practical. They are the way that I like to think of them. The obvious type of gap is well, an actual gap in price.

You will typically see this when the market opens on Sunday, after there has been some big news over the weekend. For example, this is the EURUSD chart recently. This was what the price action looked like when the situation in Greece was still up in the air.

As you can see the gaps were fairly significant. If you were in a long trade over the weekend, you could have lost money when the markets opened on Sunday. We see gaps when surprise news comes out, or if there is a lot of economic activity over the weekend. Traders want to capitalize on the events and suddenly move the market in one direction.

These are some of the ways that you can choose to trade a gap.

There are other ways to do it, but these are the most commonly taught methods. The most common way to trade a gap is to assume that it will get filled at some point. In other words, you would enter the trade when the gap appears and target some point inside the gap. Some traders target half the gap, just to be safe, while others target the whole gap. The method you choose will depend on the pair you are trading and what your testing has told you works the best.

Where to set the stop loss isn't as clear and will take some testing and experimentation. So if your target is pips away from your entry, you would set your stop loss at 50 pips.

When the gap doesn't get filled right away, or it doesn't get filled completely, you forex reclame aqui have a major followthrough on your hands.

Another way to trade a gap is to trade the price action after the gap is filled. Some traders assume that it will act as an area of support or resistance and that price will continue to move in the direction of the gap. So you would wait for the gap to be filled, before entering the trade.

In this example, it worked out well and price rocketed back up, after the gap was filled. To trade this method, you would have to judge the strength of forex gap fill trend and make a call on a continuation.

Instead of a physical gap, price simply moves very quickly through a price range. This is a concept that I learned ways to make money in rs p2p Chris Lori.

Whenever price returns to this area on the chart, it can have the tendency to run through that price range very quickly. As you can see here, after the real gap was filled, price continued upwards to form a Pseudo Gap shown by the arrow. Then when price returned downwards, that area on trading stock market basics chart was filled quickly.

Since the price action associated with this type of gap is less sudden, the fill should also have less force. Therefore, if you do take these types of trades, it is better to target fewer pips than with a Real Gap. Again, test it out and see what works best for you. Finally, remember that we don't trade in a vacuum. Always take into account current economic and geopolitical conditions, as well as upcoming news announcements. Several traders that I have talked to trade gaps quite successfully, so it is certainly worth the time to try to figure them out and work them into your trading quiver.

Hi, I'm Hugh Kimura and my goal is to forex bureau guidelines kenya a full-time income, trading Forex.

Forex Gap Trading - How to Trade Trading Gaps

If that is your goal too, then I invite you to join me on the journey. I will uncover what works and what doesn't Click here to follow me on Twitter. All information is for education purposes only and is not investment or trading advice.

July 24, at I never heard of that second type of gap but it makes sense. Chris Lori definitely knows what he is talking about. July 28, at Your email address will not be published. Notify me of followup comments via e-mail.

You can also subscribe without commenting. Trading currencies or any other financial market involves substantial risk, and there is always the potential for loss.

Gap Fill — U.S. Dollar/Japanese Yen (FX:USDJPY) / — G-money | TradingView

Your trading results may vary. No representation is being made that any associated advice or training will guarantee profits, or not result in losses from trading. Neither the products, any explanation or demonstration of their operation, nor any training held in conjunction therewith, including, without limitation, through blogs or forums, in conjunction with any advertising and promotional campaigns should be construed as providing a trade recommendation or the giving of investment advice.

All content on this website is for informational purposes only. Before deciding to invest in foreign exchange or any other financial marketyou should carefully consider your investment objectives, level of experience, and risk threshold.

You could sustain a loss of more than your initial investment. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent certified financial adviser if you have any doubts. Start Here Resources Products Blog About.

The Real Trading Gap The obvious type of gap is well, an actual gap in price. Why Gaps Happen We see gaps when surprise news comes out, or if there is a lot of economic activity over the weekend. Forex Gap Trading These are some of the ways that you can choose to trade a gap.

Gap Fill The most common way to trade a gap is to assume that it will get filled at some point. Followthrough Gap Another way to trade a gap is to trade the price action after the gap is filled. If you currently trade gaps, what is your best strategy?

Some of the links on this page are affiliate links. The 7 Unconventional Rules of Maverick Forex Traders. Comments JohnnyH says July 24, at Leave a Reply Cancel reply Your email address will not be published. Get RSI Alerts Via Email or Mobile Click here to learn more. Academy Resources Products About Contact.