I am a short-term trader and only trade if there is going to be news. The problem I face is the frequent rules of brokers that apply the terms "started gap" or "SL gap" because of significant price changes, this rule is applied. This not only happens near the closing of the market at the end of the week as you answered in Mr. Arif Yuwono's question on February 7, 2014, that's called the impact of a "started gap" but also when there is news.
My question is, are there any brokers that do not apply rules like that? because even a prestigious broker like InstaForex does this, thanks
This usually happens when the market opens at the beginning of the week. We saw this happen on the EUR/USD m30-h4 currency pair this week. Our advice:
1. Understanding What a Gap Is
A Gap is a discrepancy that forms when the price movement at the opening creates an empty space on the chart. This happens when the high of the day is below the low of the previous day or when the low of the day is above the high of the previous day. Gaps are very significant if accompanied by an increase in volume (source: stockchart.com)
The core of a Gap = there is a discrepancy (difference) between the closing price and the opening price
For example: Close at 800, next day Open directly at 900 so there is a Gap Up = 100
There are several types of Gaps, including the most common ones being Gap Up and Gap Down.
Will a Gap always be closed in the future?
Often it does, but not necessarily. Sometimes a Gap doesn't have to be closed, and this is called a Runaway Gap.
Gaps can also become new support and resistance.
For more details about Gaps, please see the image below:
2. Learn the Gap trading system.
3. You can do a demo on several brokers and then see what happens at the beginning of the week on the currency in question.
4. We cannot show brokers that are GAP-free, because price movements are determined by the activity of BUYERS and SELLERS, not by brokers.
5. To avoid unpleasant things, it is best to avoid trading systems that are speculative.
Thanks.
@ Aura:
If price volatility is very high, then all brokers will widen the spread between the opening price and the current market price, because brokers cannot anticipate how far the price will stabilize.
For news trading, we recommend avoiding entry before or during data releases, to avoid slippage (price jumps) that may occur due to high volatility and also the gap rule. Enter about 30 minutes after the data release, when the direction of price movement is clear.
Also, pay attention to the actual versus forecast and previous results.
For example, US Non Farm Payrolls (NFP) data. Previous data 200,000 jobs, forecast 150,000 jobs:
- If the release result (actual data) is above the previous and forecast data (e.g. 250,000 jobs) then USD is likely to strengthen.
- If the release result (actual data) is below the previous and forecast data (e.g. 100,000 jobs) then USD is likely to weaken.
- If the release result (actual data) is between the previous and forecast data (e.g. 175,000 jobs) then it is unpredictable, USD could strengthen or weaken. In this case, it is best to wait for market sentiment before entering.
Also pay attention to data revisions. Revisions of previously released data will have an impact on current price movements, but usually the impact is not as large as the actual data release results. If previous data is revised to be better, it will have a positive impact on the country's currency, and vice versa.