Hello - glad to see I'm not the only 'dedicated' one!!!
I just read the chapter again (and again) and - unless I'm missing it - there is actually no explanation as to 'why' just that they WILL ALWAYS be at some point in the future (according to the book).
In looking at the charts it EVEN happens of EUR/USD (sometime later I'll put the data down on paper and post this information with an accompanying chart).
Just quickly (I have to go and make lunch - we're having ANOTHER 'braai' or 'barbeque' here today) - last week EUR/USD closed at 1.3876 on Friday night and it opened on Sunday night at 1.3866. Now - you may say to yourself - 'so what - that's only 10 PIP's - less the spread of let's say 3 PIP's - so you're only making 7 PIP's - not worth the trouble' - right - BUT - NOW let's say that these are GUARANTEED PIP's - that's a different story is it not??? In other words - throw enough margin at it - so that you're making $100 per PIP - that's $700 profit on one position in a matter of hours - throw even MORE margin at it - it could be $7000!!! Get the picture??? (I only NEED about $10K or $12K to pay EVERYTHING at the end of each month). The gap was closed, by the way, sometime between Sunday and Monday - I suppose I could get the exact times by looking at the 1 minute chart - if necessary!!!
Just checked (for interest sake): the gap was closed 7 hours later.
Now this COULD get even more interesting BECAUSE there are SOME pairs that WILL have a 'gap' just about EVERY DAY e.g. USD/RUB. Why? Because this pair can only be traded at certain times i.e. not 24 hours SO let's say for example that after trading closed on this pair there was some HUGE event that took place between the close of trading on this pair today and the opening of trading on this pair the next day - it could be HUGE because the 'payoff' of this pair is very high (OK - so is the spread - but I suppose that's a judgement call).
Anyway - to be sure - I need to 'delve' more deeply into this - but so far - I CAN see that there definitely IS a gap at least once a week (can you believe it's taken me nearly 42 years to learn what 'the gap' is) - BUT - the risk involved here needs to be assessed (according to the book the gap is NOT NECESSARILY filled the next day and could take DAYS to fill so you have to make sure you have LOADS of margin to make REAL money out of this).
Actually - if I have a good look at the above statement of mine - Parabolic SAR - you're STILL the best!!!
Regards,
Dale.
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