Hello Everyone. My name is Olivier and i am new to Fx Trading and i am still learning with babypips courses.
Today, iI can notice on mu demo account, a large gap between the Eur/Usd close of the 31/01/2025 and the opening of the 03/02/2025. Can you please explain to me the reason of this gap?; It is something regular and what can be the impact on an open trade
Probably to do with Trump and tariffs. News-related.
It’s the one time of the week that forex can gap a little, but this weekend was pretty unusual, for market-related news.
It can be devastating, but rarely.
Many forex traders don’t hold positions over the weekend, though.
Many thanks for the clarifications AphoristicArmenian. I appreciate.
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I suspect it was due to the start of a tariff campaign by Trump against Canada, Mexico and China. Reports are that this has significantly raised the value of the USD, pushing the EUR/USD exchange rate downwards.
So, the next question is how can you prepare for such events?
Three possible answers immediately arise -
- always set a stop-loss to get you out of each position in case things go pear-shaped
- set a sell order to allow for sudden bearish (or bullish) news
- when a market is bullish, do not be short: when it is bearish, do not be long - EUR/USD has been in a downtrend since last September, so longs on this market have been high risk for 4 months now already
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Well received with thank Tommor.
The tariff news hit the market about 3 hrs before US close Friday evening - that’s why I posted before the close:
The problem with weekend news is that word ‘gap’.
On a live a/c price can gap thru a SL, the only sure way is a ‘guaranteed stop’ though these cost.
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Lots of events happened over the weekend, especially Trump threats about sanctions and tariffs. This caused sharp repricing of EURUSD price, when trading session start on Monday, nobody wanted to buy Euro at the price near the close of the Friday, this is the reason of the gap. Worth to say it is unusual events and rarely happens on liquid markets such as FX
Tariffs hit the markets badly. CAD entered approx 100 pips down yesterday.
Thank you for the article.
Explanation well received
Yes, I notice that there was also a gap in many other currencies price charts.
Thank you Ontario
well you know that forex market is closed at the weekends; but the value of currencies does not freeze at the weekends, a country may even fall apart at the weekends, different things can change in a week making two currencies jump or dump in value. if you have open trade when this happens you cannot have any control on your PNL! this is why a lot of trader suggest avoiding keeping a trade at weekend, even if you have a SL, this does not trigger until the start of new week and that triggers only at the price where week starts