Trading the gaps in the stock and forex markets. Keep watching the candle on your charts for buying or selling pressure will make you a better and more profitable trader. There are also four types of gaps that traders need to recognize. Knowing what type of gap you are trying to trade will also increase your positive trades in the markets. One of the big mistakes that cost investors and traders to many losses is trading gaps. The normal thinking is that when price returns to the prior day’s close, the gap has filled. Sometimes this is correct.
Most amateur traders use that point as an signal to enter a trade as they expect the price to reverse from the previous close. As the trader quickly discovers this is not the real demand or supply zone and they get stopped out. Experienced traders have learned to trade like professional traders, they will wait for the real demand or supply zone before entering a position. Those who waited for the news and waited for the price would have found themselves trapped out by the initial spike in prices only to then have to chase a violent price reversal straight after. It is very difficult to trade news especially in the forex markets.
Learning Gaps
Most amateur traders use that point as an signal to enter a trade as they expect the price to reverse from the previous close. As the trader quickly discovers this is not the real demand or supply zone and they get stopped out. Experienced traders have learned to trade like professional traders, they will wait for the real demand or supply zone before entering a position. Those who waited for the news and waited for the price would have found themselves trapped out by the initial spike in prices only to then have to chase a violent price reversal straight after. It is very difficult to trade news especially in the forex markets.
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