Gap Strategy

Gap strategy:

Near GAP it concerns a course jump which arises from the closing price from Friday evening and the opening rate from Monday morning. The reasons lie in one reacting of the banks on news and important data about the week-end. GAP strategy is based on the acceptance that GAP originates on the basis of speculations and an excessive Volatilität. One assumes from the fact that the course develops during the next hours and days again in the other direction to GAP.

Advantages of the strategy:

• Strategy can be used in regular trade
• clearly defined rules
• at a normal market very good profit possibilities

Disadvantages of the strategy:

• Positions must be opened at the weekly beginning and be closed again to the week-end

Use GAP strategy

1. For this strategy currency pairs with a high Volatilität as for example GBP/JPY are recommended. In addition are also suited all the other currency pairs basing on JPY. In addition this strategy can be applied to all main currency pairs at the same time.
2. Hold for the weekly start look out to Gap which amount to the at least 5-fold of the Spread calculated for the currency pair. Only so GAP can be also interpreted as a real signal.
3. If GAP lies on Monday under the closing price of Friday traders speak of negative GAP. In this case Long Position should be opened.
4. Vice versa one speaks of positive GAP if the opening rate lies under the closing price. Near positive GAP a Short position is advised.
5. With this strategy orders are put neither Stop-Loss nor take profit.
6. At the end of the commercial week about 5 minutes before commercial end the position is closed.