No stop + weekend gaps

So I am short on AUD/NZD. Yes, currently the trade is still open. I entered an hour before the market close, and then was immediately pulled away from my PC. I didn’t have a stop because I thought I would be there ready to close my trade well before the market closed. (Too many things going on at once) I came back to my PC around 5:15pm EST to find that the price had gapped down a few pips, and then back up. Going back the past few weeks I see that a market open gap for this pair can be anywhere from a few pips to upwards of 60+. Based on what you guys see with AUD/NZD, what are your opinions of possible outcomes at 5pm EST tomorrow? I feel so bad for allowing this to happen, even though its just a demo account. The order is for .05 lots and is currently at -$9.33.



dear friend, my thought is simple: NEVER EVER TRADE WITHOUT A STOP LOSS… I believe is a “cardinal sin” to get in such a habit. I always and i mean always trade with a stop loss order and even so when the market “jumped” last year on the gbp/jpy it did so for over 200-500 pips (cant recall) all I know is that I ended up losing 9 times my stop loss amount (my risk). this is why I found a broker that provides a “guarantee stop loss order” ever since. This happened to me with an stop imagine what can happen without! it could wipe out your bank!

anyway, is up to you of course,
happy trading :slight_smile:

I’ve always set a stop with only 2 exceptions. This being one of them. Thanks for the reply.

I agree w fxpirana.

I set my stop loss before I set my limit order everytime. I hope the trade works out for you.

Would you be willing to share the 2 exceptions that would cause you to enter into a trade w/o a stop loss?

Its always hard to judge which way a market will go within a time-frame of minutes or hours. I only trade forex on multi-day time-frames using trend-following.

Price is well below the 200EMA after two earlier failed attempts so its “support” is clearly broken. Price has got there with 6 consecutive very negative daily candlesticks. The 50EMA remains above the 200 but is dropping fast and accelerating its dive. The weekly chart shows consistent downtrend since mid-March. The swing high 19/05 is far behind now and was clearly lower than the previous swing highs 16/03, 31/03 and 01/05. This week’s candlestick is very negative and price closed at the week’s lowest close on Friday, near the weekly low, all suggesting a bearish continuation. On top of this, 6 of the 7 AUD charts I watch are bearish and that total has increased this week, while 4 of my 5 NZD charts are bullish and that total has also increased this week.

I am short AUD/USD since 24/05 which looks an OK bet but possibly a rater late entry for the best results.

So I agree with being short AUD and long NZD. Its possible to call your entry late, as the negative day following the swing high would be the classic entry point, and the effect of this might be to trap you in a temporary re-bound for a few days. There could be some opening volatility as the week opens and settles: having no stop-loss might actually help here as it will stop you being taken out of a good TA bearish position by some transient price swings. (I have on occasions removed stops for the open of various markets to avoid being taken out by swings).

Sorry I should have been more clear. There has only been 2 times that I’ve not set a sl. This is one of them. The first time was my 1st order ever placed.

Hi Tommor, thanks for your input. I too was thinking there could be an early bullish breakout with an eventual dip back downwards. I’ll set a stop loss and see what happens. The reason I show the low time frame charts is because I was only looking to get in and out before close. Lesson learned not to place an order on Friday afternoon while still at work.

Well, thanks for the clarification but this is where our understandings part company.

You entered a position short, based on good TA, and we agree on that. The chart for the day and the week printed very negative, with the likelihood of further bearish price action. At which point you would have preferred to close a position that was likely to generate more profits, more likely even than when you first entered.

Don’t you feel like the (very English) shop-keeper who hustles customers out of the door before they can buy something, as its 5:30 and you want to lock up?

Point taken. Yes I do, now that its been put into perspective. Of course I was only looking for a small gain to cap the week. Not my typical strategy, but I am still learning. Thanks.

my money: careful, as gaps can be terrifying. also, you’re trading a cross pair which isn’t one of the liquid ones. study some gaps that have occurred, perhaps at dailyfx. several hundreds of pips have occurred occasionally (either on weekend or during trading,can’t remember). if your risk at 1% and you’re doing a short term trade (small stop loss), it’s gap/stop loss. e.g. 600 pip gap/20 pip = 30X=30% loss. much less for a e.g. 100 pip stop loss using standard 1% risk. and if you use 2% risk then it’s double etc… and watch the swiss frank- the 4000 pip or so gap = big debt. that was a disaster since chf was /is ? a pegged currency. but life must go on, always…i think i read on dailyfx for short term trades at least, to close them before the weekend. there is a page there about risks worth reading

Gap trading needs much practice . When you decide not to close your orders when market is close at week ends or you set trading for gaps you are at high risk . Gap trading can give yo profit when market opens , It can throw you back if market is not exact as you thought for it.

My intentions were not to carry the trade over the weekend. It was a mistake. Luckily the AUD/NZD didn’t move much and I actually closed the trade in a better position than I had imagined. Thanks for the advice though. Thank you all.

I feel hesitation for gap trading because of fear . May be this gap push me back to loss. No body knows how much gap will effect his trading.Small investors should avoid gap trading or set their trading with mini lots . I just try some times for gap trading It is easy to get profit if your analysis works.