The Forex Gap Trading Strategy

The foreign exchange gap trading strategy is an intriguing trading strategy that exploits one of the most depressing phenomena of the foreign exchange market – a weekly spread in the midst of the Friday’s close cost and the present Monday’s open cost. The spread itself takes its source in the observation that the channel bank currency market proceed to respond on the fundamental announcements throughout the weekend, opening on Monday at the climax with the most state of matter. The provided strategy is focused on the basic assumption that the spread is an outcome of speculations and the surplus volatility; hence a position in the reversed direction should apparently become productive after a couple of days.

Features

1. Proper trading with precise rules.
2. No premature hits or hunting of stop-loss.
3. Statistical proven gain.
4. You have to begin position at the week’s kickoff and terminate it exactly before the end.

How to Exchange

1. Chose a currency pair with an approximately high intense of volatility. I advise GBP/JPY it indicates the best outcomes in the midst of my test. However, other JPY-supported pairs should succeed too. Incidentally, it’s a marvelous strategy to utilize on all main currency pairs simultaneously.
2. When a fresh week begins observe if there is a spread. A spread should be at least five times the average gap for the pair. Likewise it cannot be contemplated a real indicator.
3. If Monday’s (or late Sunday’s if you trade from North or South America) commence is beneath the Friday’s (or early Saturday if you trade from Oceania or Eastern Asia) close the spread is negative and you should commence a long position.
4. If Monday’s start is higher up the Friday’s close the spread is positive and you should commence a short position.
5. Do not establish a stop-loss or a take-gain level (it’s a rare occasion but stop-loss isn’t recommended in this strategy).
6. Right in front of the end of the weekly exchanging period (e.g., 5 minutes before the end) you compel to close the position.

Instance

You can notice GBP/JPY pair’s past seven weeks (as of May 24, 2010) and all have spreads. Six out of seven deliver correct indicators that produce in a lot of gain. The final produces a wrong indicator and give away a moderate loss. The average gap for GBP/JPY was three pips throughout the instance timeframe and all spreads were much broad than fifteen pips, making them all certifying indicators. The net total gain was 1,612 pips in seven weeks- not that worse.

Utilize this strategy at your own risk. WindsorForex.com cannot be responsible for any losses associated with using any strategy presented on the site. It’s not recommended to use this strategy on the real account without testing it on demo first.