1. Gaps? What to do?
© 2009 ProAct Traders LLC

2. Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors.. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts. See disclaimer at: 

3. Gaps Occur due to primarily two things: A fast moving market
After hours trading over the weekend
The rule of thumb is that ALL gaps get filled
The question is: WHEN?

4. Gaps filled Usually gaps will be filled within 24 hours
This is especially true if they occur over the weekend
This is an untidy mess from a trading standpoint and since all gaps are filled, Institutional traders like to fill them and get that “loose end” out of the trading criteria for the coming week

5. So let’s look at some

6. If the market is going to go down- it will fill it on the way down
In this scenario, since the gap is less then 60 pips away – it is easier to fill it now before any continuation – IF it is going to go up.
If the market is going to go down- it will fill it on the way down

7. This is an OVER the weekend Gap caused by after hours trading

9. How to trade them
They are hard to trade since no one knows WHEN they will be filled
It is best to use the information to stay OUT OF A TRADE!
Or to use it as a target when the reversal comes. This way you know that they are trying to close the gap
Some Gaps do not get filled for months …but sooner or later they will!

10. As of May 26, 2009

11. Advanced Traders could take the trade back to the gap

12. Thank You