In the world of Forex trading, gaps are a common occurrence, but they don't happen in the same way as in other markets like stocks. These gaps, which represent a difference between the closing price of one period and the opening price of the next, often happen during off-hours or over the weekend. But the question is: Where do gaps typically occur in the Forex market, and how can traders potentially take advantage of them?
Weekends and News. There used to be services where you can get rumors of orders and big exotic options in play, like DNT barriers from big players such as sovereign wealth funds, not sure if that still exists. Hard to know what's going on there, unless you're playing macro or just price action.
Where is there seldom a gap in Forex If there is a gap, it will be rather small. It is common to see a huge gap in copper, and oil futures in INE Exchange from China. The market opens and closes 4 times a day !!!! copper and oil futures are relatively volatile.
"In the world of Forex trading, gaps are a common occurrence, ......." "Where do gaps typically occur in the forex market?" Which is it?
OTC markets. It usually means that a player overacted with a size that is over the average. (Captain Obvious) Transactions are not reported in real-time, so you might have great lot of them at a specific time causing a gap. An example might be a bank reporting a great deal of transactions a few hours after they have been agreed. That is why retailers shouldn't trade Forex, you are never aware of what is going on there.
Weekends and news releases definitely create gaps due to low liquidity and sudden shifts in sentiment. The mention of DNT barriers and big players' orders is intriguing—knowing that could provide an edge. Price action, though, always remains key for real-time decisions.
That’s a good point about OTC markets and how unreported transactions can cause gaps. Since we can’t always see these big moves in real-time, how do you think retail traders can manage the risk of unexpected gaps?
If I had to trade Forex I would look at monthly times frames. There you can see some levels where you could enter. Stay away from anything shorter than that. Do not day trade Forex. That is a recipe for a disaster. I always recommend currency futures to whoever wants to listen. In the futures market you will be able to see all transactions reported in real time.
That's called crap data and or bucketshop data. Anyone who gets a lot of unexplained gaps, especially unexplained after the fact, needs to question who they are trading with. Not the trading market itself. FX trades trillions, mostly off line so to speak. No real gaps except, as mentioned previously weekends and news events.