Trading "the Gap"

 

Hello everyone, I wanted to see what your thoughts are on trading the gap that happens once in a while on Sundays, and holidays,etc. Tonight and last week, there were some pretty big gaps that happen particularly on the GBP/USD. From my experience every time there is a gap, price will alway move back to where the gap began. For you experienced traders out there, is this always the case, or does this not happen every time? If my theory is correct, this is a great way to make some guaranteed pips, even though it only happens once in a while.

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jperna21:
From my experience every time there is a gap, price will alway move back to where the gap began.

dont know where youve been looking but heres what i found

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I am talking about the gap that occurs occasionally when the broker has been closed, i.e. weekend, or holidays. The broker will sometimes reopen with a gap in price. I am not talking about during high volatility times when this gap happens.

 
jperna21:
I am talking about the gap that occurs occasionally when the broker has been closed, i.e. weekend, or holidays. The broker will sometimes reopen with a gap in price. I am not talking about during high volatility times when this gap happens.

Then, the gap is only that you do not see the quotes, but the quotes are there, there is no gap at the market level...

And what should magicaly do that there will be a retracement because your brok was closed ?

 

I thinks it's likely to be happen. My friend of mine, he is a senior trader, trade it with high probability of success. Last week I got 40 pips on moday morning (my timezone is gmt+7 ), it should be 90+ pips if I didn't quit too soon. This gap was happen again yesterday, that should be a nice 20 pips, too bad I'm on vacation.

Although further research may needed, personally I'll trade it if the gap is more than 20 pips. I always move my SL to BEP once it's move 10-15 pips in my direction, and last candle's close is my TP.

 
Michel:
Then, the gap is only that you do not see the quotes, but the quotes are there, there is no gap at the market level... And what should magicaly do that there will be a retracement because your brok was closed ?

My theory, again its only a theory is that when the brokers open, which most of the major brokers all open around the same time on Sunday. Traders see the change in price that happened over the weekend "the gap". At that point many traders realize that that their currency became over valued or undervalued, which then take buy/sell positions right at market open accordingly, to correct the price. I think there is this type of reaction, becuase most traders aren't expecting to walk into sizable price movement over the weekend when most banks, and traders don't trade. Again I don't know, I am a novice trader, thats why I was hoping to get some wisdom from all you experienced traders

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