Gap and panic
If the gap does not appear in the right direction, then the trader may become discouraged, or even panic. If you trade in currency pairs, then you should not be too afraid of gaps. True, Forex has its drawbacks – it is poorly predicted. In the initial stages of the new bull market, gaps down are also practically excluded. Diversification to some extent can mitigate the blow to the trader’s wallet, but not completely secure its capital.
Gap and indifference
Can gaps be indifferent to a trader? If he stands in the market and falls on the gap, then no. But it is possible that when trading the smallest lots, a trader may be practically indifferent to price gaps.
If the speculator is completely indifferent to gaps, then he has lost interest in the market or simply does not trade.
Does stop-loss always save you from a gap?
Stop from the gap – the order does not save. You will automatically take losses if the chart makes a jump, not in your favor. Fortunately, if this jump is small.
Gap and Elliott Wave Theory
Is there any hope that the Elliott Wave Theory will tell you where the gap might appear? This theory is most cases will tell you the direction of the chart. Of course, there is nothing surprising in the fact that help from this theory is not always available.
Gap and cancellation of a transaction
If the market makes a jump of 10% of the price or more, then the broker, according to the contract, has the right (but not the obligation) to cancel this transaction. Do not think that such jumps happen often. And yet, they do happen sometimes. By the way, the movement of 10% or more can be not only due to the gap but simply because of the active growth or fall in prices.
Price gap and good luck
A gap in the right direction is also not always desirable. If you are trading in the method of building safe pyramids, but there is nothing better than a slow movement of the chart in the right direction without jumping. A chart that can make an upward jump is usually capable of making a downward jump. Market liquidity is what matters most to speculators using pyramiding.
Gap and large trading volume
If you entered the market in a huge volume, then it is likely that during the gap you will suffer financially or become rich financially. Both are not good. Luck can inspire you, unbalance, and this will also adversely affect trading in the end.
Gap and small trading volume
Small trading volume is also bad if it is too small. Yes, the gap will cause minimal damage if you trade a very small lot. But such trading may be meaningless if, for example, you work with a lot of 0.01 with a capitalization of 10 thousand dollars. The working volume of the trade should be optimal – neither large nor small. How to choose it? And this is art!
Gap: scientists and ignoramuses
Traders react differently to price gaps. Those speculators who have seen a lot and know, as a rule, respond adequately to the gaps, and the “unfired” exchange players can be overjoyed and overly mourn. It’s not uncommon that they become stupid when they look at the charts and are hesitant to do anything.
Get rich on the gaps
Do you want to get rich in gaps? During a sharp jump in the chart in the direction you need, it is best to close the profit deal and not enter the market. Does it make sense to pursue a schedule? There is no definite answer to this question. In some cases, this will bring effect, and in some – not. Most professionals come out of such a deal and remain on the sidelines.
Effective Gap Trading Techniques
Do you want to make money on gaps? It has been observed that price gaps are overgrown. For example, if the euro-dollar pair closed at 1.1550 and opened at 1.1600, then the chart is likely to move back to around 1.1550. This does not always happen but in most cases. In about 4 cases out of 5, everything will happen according to the above scenario. Many speculators take advantage of this. They work in such cases large and very large. Of course, trading an exorbitantly large lot is always dangerous. Yes, the gap can overgrow, but this does not happen right away, and the schedule may go in an undesirable direction. And it is not a fact that you have enough funds to hold out during losses.
On gaps, you can earn and look for problematic stocks. When they open with a gap in price one day, you must quickly exit the transaction.
It’s important not to save with all the changes. Professionals know how to do this, but amateurs do not.