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Forex trading strategy with Gap - Gaps Breakout

Offers Investors

A complete trading strategy to converge multiple factors such as trends , the level of clearance and confirmation signals . Therefore , never had a trading method based on a single tool , meaning that you should not just look at one , two Japanese candlestick reversal signal , the right hand is , so will do increased risk. So every time you notice an important signal , for example , the cost model should continue to patiently wait while Breakout join . Review the topic of Technical analysis with Pivot Point and Securities: fundamental analysis vs. technical analysis

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 choi forex voi gap
Gaps are a less frequent phenomena in the Forex market than pullbacks but still, they are part of price action. Why do prices gap? The answer is simple: they gap up because sometimes there is such a drastic imbalance between supply and demand that the exchange rate jumps many pips from one price to another.
It can happen during less liquid times such as bank holidays or over the weekend, between Friday's close and Monday's open. When there is more demand than supply at the Friday's closing price, the market will gap higher on Monday's open. Conversely, when supply exceeds demand at the Friday’s closing price, the market will gap down on Monday's open. In volatile market conditions, gaps happen more frequently but typically, it is at the open of the market when the biggest imbalances in supply and demand occur.
A successful trader is always searching for market situations where price is at levels where supply and demand are out of balance. He/she trades the exchange rate back to price levels where supply and demand is balanced again. As gaps are a well defined footprint of an out of balance condition, they can represent an opportunity as well to spot low risk, high reward, and high probability trades.
The advantage of understanding what is happening behind the scenes gears you with a certain objectivity and allows you to look beyond the candles and their patterns. You can then plan your trades in advance and avoid emotion related to mistakes.
Depending on the direction of the trend and the direction of the gap, the message can vary and so the way the opportunity can be traded. There are basically four combinations leading to a different interpretation and action each.
The four possible set-ups will help you determine the probabilities, the risk and the reward.
The Currencies At A Glance tool has, among other indicators, a use full gap detector.

So when the gap appeared?

In the stock market will see Gap appear very frequently, while the Forex, Gold account less common due to high liquidity and trading throughout Gap 24/24 should occur on:

  1.     MONDAY Morning Opening
  2.     When a strong seismic event: For example you believe interest rates or unexpected price jump NFP created Gap.
  3.     At international festivals, for example, Christmas or international employees, New Year, ... in these times, you can "jump Gap" in-session always. Trading volume erratically should facilitate Gap


Note that due to the difference of time frame, hours of operation of Exchange Server that can be seen with Mt4 Gap above this floor, while another floor no. In this case the signal you still follow the Gap but should only believe in the large floor as xm.com
The main kind Gap

  •     Breakaway Gaps: this type when extreme market volatility, creating Gap finished straight onto the cloud always, not back fill zero in Gap.
  •     Continuation Gaps: this type is an ideal opportunity for trade, means that after creating Gap fill is complete, return rates continue to trend in this topic about how to trade the kind Gap continues.
  •     Gaps exhaustion: This type is considered to be "cheated on" Bridging the gap reversal always done it, do not be afraid of Stop Loss, the adhesive must be cut holes for signal interference created by Gap well deserved because often real reversal . There is no way to absolutely 100% safe, the only technique incorporates Price Action signals other to increase the ability to win only.

Gaps in a downtrend:

1) A gap up in price into an objective supply (resistance) level is a high probability shorting opportunity in the context of a downtrend.
The chart bellow shows a short position taking advantage of the gap up in price at the market open on 9th November 2014. In a downtrend, the idea herewith exposed is to sell short on a gap higher into a recent supply area - we want to sell to a buyer who is buying into a supply area in order to increase the odds in our favor. This type of gap is likely to get filled very quickly as we see in the five candles after the resistance has been touched.
GBP/USD 1Hr
And yet another example with profit target included:
GBP/JPY 1Hr
2) Gap down into an objective demand (support) level. A gap down in price, in the context of a downtrend, can be a very high odds selling opportunity.
GBP/JPY 30M
A gap down into a demand zone might be seen as a buying opportunity. However, when we consider that the main trend is bearish, the best set-up derives from identifying the next supply zone and enter short from there. This idea has a higher probability of success because the gap almost always get filled.

Gaps in an uptrend:

1) Gap up in price into an objective supply (resistance) level in the context of an uptrend can actually be a buying opportunity.
NZD/JPY 1D
Notice how this gap up was the expression of buyers buying at a resistance (supply) level. This strong willingness to drive prices higher caused a breakout and a gap up in the exchange rate which was later filled by the pullback down to the same level, considered now a support.
2) A gap down into an objective demand (support) level during an uptrend indicates a buying opportunity.
NZD/CHF 4H
Buying on a gap down into demand is a great opportunity, specially in an uptrend. Think whom you are buying from at the demand (resistance) level: from inexperienced traders who sell after a gap down in price into a level where buy orders are sitting.
This is a brief excerpt from one of the articles, written by Sam Seiden:
"While there is much more on gaps than one can write about in a short piece such as this one, keep in mind that the picture of the ultimate supply and demand imbalance is a gap. When you are ready to take a trade, simply ask yourself "who is on the other side of my trade?" and make sure you are trading with someone who is making a big mistake according to the laws of supply and demand, motion into mass, or whatever version of this basic governing dynamic you want to call it.
Instead of looking at red and green candles on a chart and following a conventional Technical Analysis book, start looking a little deeper and begin to understand the order flow that is responsible for the creation of those candles. These basic thoughts will likely give you an edge over those who are on the other side of your trades and having that edge is the key to trading anything. If you are tired of transferring your account into someone else's, stop looking at the market the same way everyone else does.

Chart patterns as the ones disclosed here have true predictive power and emit an evidence that you can detect and measure. Each independent pattern is different but, approached with a certain methodology, it can raise the odds that a trade set-up will produce a valid result. In the following section we are going to converge diverse elements so you can start developing an efficient trading methodology."
The contents herewith provided will enable any trader to minimize questionable entries and improve exits. By objectively identifying support and demand levels on a chart, trading positions can be taken with a much favorable risk to reward ratio.

 Overview of steps dealing with the Gap as follows :

    Step 1 : Determine the Gap and the super strong clearance
    Step 2 : Wait occupancy rates Gap
    Step 3 : Trading trends

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