GAP trading. Brainwave or braindead?

Hi.

After a bit of thought Ive decided to open an account purely to try out trading the gaps that we sometimes get, particularly over weekends. Ill keep this account totally seperate from my other accounts and Im only using money I can easily afford to lose without getting stressed.

My basic idea is to look for gaps developing in the hours before markets reopen after weekends and holidays and then trade either in the direction of the gap or, more likely, in the opposite direction of the gap. For example, if EurUsd looks like gapping 100 pips up after the weekend I would, most likely, look to go short targetting at least 50% retracement as my profit. If I believe there are strong reasons for the gap to continue widening when the markets reopen I would not enter a trade.

I would appreciate any comments anyone has to make, particularly if anyone else has experience in doing this.

:41:

Note: I am not recommending nor suggesting anyone else tries this or copies my trades, this is no more than a trial to satisfy my curiosity and I accept no responsibility whatsoever for other traders and their actions

might work till the Greece situation is dragging on… recent history suggests first few hours after gap is always in opposite direction…

Right, I have my eye on 6 pairs that seem to behave how I want most weekends when there is no news events expected.
I’ll monitor their prices in the hour leading up to the market reopening, pick 1 or 2 that look promising, and post my intentions in advance of the market opening.

Hello Eddie

Japan is off on Monday, which means; long weekend. This increases the possibility of a Gap for Japanese pairs. Might be helpful for your tactics ?

Thanks for that. Ill have a look back at what happened on their last public holiday

Well, what a wash out this weekend was.
Hopefully its down to the Japan holiday on Monday, but the gaps were non-existant, so I havent entered any trades on this basis.
Try again next week.

How about trying to trade intraday gaps on a smaller timeframe.

I’ve given up on this idea, half decent opportunities were too infrequent for the amount of work needed. I did make some money, but not enough to warrant my time

Its still interesting idea for me
I think need to wait for bigger gaps and trade the reversal and pull back trend