Success on the Market Gap

As you all know, very rarely do I ever give trading advice; usually I stick with more informative information. Because I am an educator by nature, I usually feel it is my place to help prepare Forex traders for the Market they are about to embark upon. Since I have over 7 years of personal Forex experience, I usually take the time to equip some of the newer traders on what they need for success. This article, however, will be slightly different in nature.Over my years of trading, I have picked up a few “tricks” here and there. I have noticed, over the years, that there are certain things that happen more frequently than not. One of the things that I have seen is that the Market is pretty consistent, for the most part. What I mean by that is that usually, if the Market is trending up – it will stay going up until adverse fundamentals. The same goes for it heading south too.

The other neat “trick” I have had the pleasure of observing is when it comes to Market Gaps. A Forex market gap usually occurs in the Market price between the close of one day and the open of the next. Here is what it is; if the open is above the previous day’s close, this is commonly referred to as Market “gapping up.” If the open price is below the previous day’s close price, then this is called Market “gapping down.” If the open is at the same price level, then there was no gap. This makes sense, right?Now, based on the information derived from the data, some traders (like me) take this Market constant to trade gaps. Another commonly used Forex trading strategy is basically to ignore weekend trading altogether, when volume is small and most of the world is not working. If you decide to go this route, you would simply set a closing time on Friday and wouldn’t attempt another trade until the opening time on Monday.

I have learned that the Forex currency trading strategy for gaps is contrary by nature. If the price gaps up, many traders (like me) sell. If the price gaps down, many traders will buy. This Forex currency trading strategy works more often than not, but it just a simple example that can generate profits. I am not suggesting that you employ this strategy, but I am saying that it is a strategy that is a commonplace thing for many traders.You are free to choose your route and use your plan, but if this is something that interests you, I would advise trying it on your demo account FIRST – before you look to execute on your live station.