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hulk2008's Blogs

2010-07-16

How to Trade Forex Gaps?


It is known that gaps occur in the equity markets, but it also occurs in the Forex markets. And gaps, currency trading (Forex gaps) are defined as areas on the trading scheme (graph) where the currency is moving strongly towards the increase or decrease with little or no trading of any trading through them.

Trading on the outline of the Japanese Candles is the gap distance between the large candles in a row. In other words, the gap occurs when the pair jump from the price column to another with a big difference between the value of the price on the two columns.

More Possible causes of gaps is the lack of liquidity, lack of quantity and lack of market participants. In the Forex market in particular, usually what happens this type of gaps through the end of the week, and can provide very good opportunities for profitable trading operations, if traders are able to translate the creators of these gaps in the correct format, and then use the information learned from them.

* The four types of gaps Forex:

Gaps occur as a result of key events, or technique. For example, the major event that could affect the forex market by forcing a pair of currencies, the opening is very high after the end of the week. Basically, there are four types of gaps are:

1 - breakaway gaps: occurs at the end of price patterns, and point to a significant decline or new directions.



2 - debilitating gaps: occurs near the end of the price patterns, and produces a result of the price one last attempt to reach the highest high or less decrease.



3 - public gaps (common): can occur at any time, and is not linked to any patterns for the price. These gaps are filled and covered very quickly, meaning that the price in the coming days (a few days to a few weeks) will cover this gap.


4 - continuity gaps (continuing): occurs in the middle of the pattern of price, and recovery usually occurs because of market sentiment, confidence in the fundamental direction for the path of the price.



"Filled with the gap"

2 comments:

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