Hi,
I am new in Forex world. So it may be my questions too simple but I could not find an answer yet:
How is possible that there can be a lot of difference between the close price of a candlestick and the open price of the next candlestick?
May be it does not matter a lot for short times but I saw that there was more than 50 pips difference occurred in a week end.
Best Regards
Hi:
What you are talking about is referred to as a “gap” in price. It’s very common in stocks and futures, less so in forex since it’s traded 24 hours around the clock and usually very liquid (a lot of buyers/sellers conducting business at the same time).
The usual time a gap would occur in forex is between the weekly close on Friday afternoon and Sunday night opening. This is normally caused by some news event that took place during the weekend. Let’s say some news came out on Saturday that’s bearish on the U.S. dollar, when market opens on Sunday evening, price on the dollar might gap down from the Friday close since everyone wants to sell the dollar and no buyer willing to take the Friday closing price.
Hope this helps.
good question but i think that it’s not the matter. The main point is How to reach our goal in trading??. Its the main issue that never of anyone able to get their goal in trading. Almost 90% trader loses there.
The new candle on most platforms is created with the first tick in the new time frame. Normally the first tick is very close to the closing tick of the previous candle. The only possibility for the opening ticks to be far away from the next is the Market news and sharp movement- when price changes by many pips in a single tick( think SNB removing peg middle of January). Or Weekend gaps.Friday close may be far away from the first tick on Monday opening. The chart will show it as a gap.
So to sum it up:
1- Gaps can be the reason for that.
Gaps occur due to
a. stock splits or dividends
b. too many events/news during the weekend/overnight,
c.or due to low volumes.
2-Another reason (If it is not a gap) more common in stocks is that the “last” price is not the “closing” price of the day. Closing price is usually a weighted average. This means the “open” price next day is different than the “closing” price (the previous day), yet closer to the “last” price (the previous day).
Hello, as Forex market is open 24 hrs still we can see a change in the previous close and next opening as markets close on Friday noon and open on Sunday night. The gap here is a big gap. To change the price of anything be it currency pair, stock, commodity etc. even a single second can make a difference. Therefore the change in prices usually happens due to following reasons:
1.News-Any latest news that concerns the currency can cause huge impact over the pair and can cause huge gains or loss.
2.Political changes in the country can cause a change in the value of the home currency.
3.Technical Breakouts can be one of the reasons for gaps. Pressure of selling and buying can cause bids to change overnight.
These are various possible reasons for your query, NEWS being the main and major reason.
Happy Trading