Welcome to another koala forex education series. Learning forex made easy! What is a forex gap?

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For example, Friday close: There you go, a gap of pips! As i mentioned earlier, a forex gap most commonly refers to a weekend gap. These gaps are usually smaller in sizes. Therefore forex gaps can possibly happen at anytime of the day as long as there is a disconnect of the price of the currency pair.

Why do forex gaps happen? For example, a Group of 7 financial meeting to discuss the current state of financial issues which is probably rather consequential may take place on a Saturday. Any unexpected result of this meeting may cause expectations to change. How can we handle forex gaps? There is no crystal ball. The best we can do is to mitigate the risk of forex gaps. Therefore you should always practice proper money management at all times. I had three margin calls before and one of which resulted from a gap.

The gap was so big that it wiped my entire account and went into negative.

There was no way for the broker to close my positions over the weekend. A last note before i end this article. You may have heard people speculating on whether will the forex gap close.

When a forex gap closes, it simply means that the price goes back to the level it was before the gap. One possible reason for a closure will be that the gap may have happened because of a knee jerk reaction to an event.

Trade safely and do not be a victim of a margin call. The forex markets are closed from the New York close on Friday how to trade the gap in forex ET Eastern Standard Time until Sydney open on Sunday evening ET.

Some of the large banks provide forex feeds which do not have gaps over the weekend as their feed starts the moment the markets open again. Other forex dealer feeds eg Forex. If see see a gap — you are in the second of these two trader situations ie cattle class. Thank you for the great article. I was wondering in the example above, if I have a stop loss in place, say 25 pips for the current price before the gap, will how do you make money in realm of the mad god kick in over the weekend when the gap occurs?

You mean if you have a stop loss but during the weekend, the price moves beyond your stop loss? If so, the broker will usually close at MARKET PRICE when the trading starts.

Folks do join the free mailing list for exclusive updates!! Good article thank you!

If you do your risking way too much. That would be me hahaha happened when I was new to forex. Ended up having a negative in the margin account. That was years ago. This got to be the most simple yet useful forex gap explanation out there on the web.

I have signed up for your free mailing list and I like what I see so far. I like the forex education. Had been looking for this a lot time. Always wondered why those forex gaps happen. I was asking this only last week. Thank you for a great explanation. TheGeekKnows Forex Made Easy.

Forex Gaps. What? Why? How? | TheGeekKnows | Forex Made Easy

In the strictest sense, these gaps are not gaps per se. There was no way for the broker to close my positions over the weekend If you are a short term trader days at most consider carefully before leaving trades over the weekend. Definitely keep a lookout for economic events scheduled for the weekend. Make sure you practice proper money management. Many investors take profits on Fridays. This is not without a valid reason. They probably do not want to face the risk of holding the positions over the weekend.

Practice proper money management and this may save you from catastrophic events A last note before i end this article.

Good article about forex gap. But not very big. I always wondered why. Thank you geek koala. I like your site.