With much beginner trading education and general trading suggestion to not trade Fridays, has anybody ever looked at trading Fridays specifically to trade against all those who close out their week’s positions to lock in profits and close shop until the follow week?
The suggestion to close all trades Fridays seems so prevalent that I would think you could use the herd mentality against the herd and make some pips.
You’d still have to take into account S&R and time-frames and SL, etc., but maybe there’s an edge there.
Perhaps something as simple as looking at the trend for the week and trading against that on Friday.
@tommor’s right… I really never gave that much thought, but my impression is that you have to have some sort of way to determine what “The herd” is doing at friday close to plan trades as you’ve suggested.
I haven’t seen or read anywhere how that is possible (unless you’re run a brokerage firm haha )… It would be more practical (IMO) to build a strategy around market open on Mondays instead, the Gap and the context (price action) behind it gives much more information than one could hope to get on a Friday evening.
The stock market is an example of how powerful monday gaps can be if you know how to harness it. I assume there would be traders out there doing the same with Forex.
@macilme Gap fill/fade strategy is really easy and effective. In stock you can easily do it with pre-market preparation and I wish there’s a way to do it with forex but so far I haven’t seen much gapping happening because the market is 24/5. The biggest gap I’ve seen is probably a 5pip intraday gap which gets filled within a minute. Otherwise I did twice trading CN50 and GER30 got nice profit. If there’s a way to view forex after weekend pre-market I would love to know!
Unfortunately I know very little about Gaps my friend, however I assume that “Gap Fill” as a strategy isn’t very likely to be successful in forex as a whole… Usually because from the I’ve seen, Forex gaps have two limitations in confluence:
Gaps more often than not aren’t wide enough (usually just a few pips) to make trading its fills worthwhile,
Spreads during gap periods are often relatively larger than other periods, eliminating most of the potential profits to be made trading the fill.
Gap trading would probably work built around a price continuation or reversal after the gap but not the gap itself. It’ll be interesting to see if there’s anyone already doing that within the community here.
The forex markets trade 24 hours a day from the Asian Monday morning open to the Friday evening US close. I live in the UK so in my time zone this means about 10pm Sunday evening to about 9pm Friday evening. So there is a gap between the Friday close and the Sunday (Asian Monday). The market does not have to open where it closed and often there is a gap between the two. In forex its usually very small but it does exist.
Sometimes the direction of the open price compared to the close indicates that price will continue in that direction. Other times, the gap will be closed as price travels back through it towards the Friday close price. The upper and lower levels of the gap can be regarded as support or resistance. how to trade these things is not obvious but an opportunity exists.
I am also closing my positions on Friday. Firstly, because usually Friday is profit taking day. Secondly, I never know where the market will open on Monday. So, in order not to guess market moves, it is most convenient for me to close my positions and then start new trading week on Monday
Nice post (and I don’t trade FOREX so I know well what you’re talking about obviously).
There isn’t a way. They’re meaningless. And even if they were not meaningless: if they’re large enough to even warrant a punt then in all probability they’re breakaway gaps anyway i.e. don’t expect to fade them expecting them to close. Might happen eventually but as I’ve noted on another thread: if a FOREX gap gets closed it’s simply a function of the pair just having come back to be trading at that price level i.e. not a function of a gap that MUST be closed.
To correct one of my other learned friends here: Thursday gaps, by the way, have about an 80% of closing on the same day in the stock market (not Mondays). Many many sites with these stats. for your perusal and fun and amusement.
Funny visual. I’d probably have to do a lot of drinking over the weekend and start of the week worrying about the outcome, so best to stay away I think.
)… It would be more practical (IMO) to build a strategy around market open on Mondays instead, the Gap and the context (price action) behind it gives much more information than one could hope to get on a Friday evening.