Home > Forex > Gap trading becoming popular

Gap trading becoming popular

June 23rd, 2010

Seems like there’s a increasing interest in trading the gap in Forex between Friday close and Sunday open prices. As I’ve written about earlier I have bought one product with this strategy earlier this spring. I can’t really say that it has been working out great. So far I’m behind $100 in total, out of which EURUSD stands for $175 of losses. All other pairs are in profit. Clearly the SL of Forex Harvester is way way to big in relation to the profit it takes. The developer is now stating that there is a second version coming for free for current customers. In the mean time I’ve disabled the EURUSD pair.

I was just made aware of another commercial EA trading the same strategy, but it really seems to be better programmed. It opens just one trade (per traded pair) and it uses a much tighter stoploss. I haven’t gotten it, but perhaps I will. Check it out yourselves, it’s called Forex Gap Robot.

Even thou these implementations are different and the details is unknown to me it is a very nice addition to a portfolio I think. I’m a bit tempted to code a EA myself to be in total control of the logic used. The strategy is very simple, and it have been used for years in different markets (most other markets have gaps every day). One thing to remember is that the results are very broker sensitive as different brokers use different end and start times. Also the spread can be very wide in the beginning hour(s) of the Sydney session.

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  1. Matt
    June 23rd, 2010 at 17:26 | #1

    Hi - Long time no posts! Glad you’re back and now blogging - and not giving up on the strategies…

    For Gap Trading - I wrote my own EA (well adapted another persons slightly), and posted it in the following forum:

    http://www.forex-tsd.com/suggestions-trading-systems/25223-around-90-accurate-trades-lets-make-ea.html

    I wrote the EA which simply looks back in the Bar history for a change in the day - so you don’t have to know the time a broker closes or worry about GMT offsets etc. The version there that I posted trades on a single Pair, and depending on the size of the gap - it takes a set percentage factor that dictates the S/L and T/P to use. I backtested it, and from what I remember - it didn’t quite seem like 80+% fill on gap. It was more or less 50% - but maybe my EA wasnt perfect. To be honest, I coded it, backtested it, set it on live, and it made a large loss - so I posted it to the forum and it’s now gathering dust in my long list of half finished EA’s…

    Feel free to take a look…

  2. June 24th, 2010 at 09:49 | #2

    I’m still here, trying to get rich ;)

    Ah, that is nice. I’ve seen a few implementations floating around (one at Donnas and one at Funyoo’s elite section I think). I’ll see if I get some time off to check them and yours’ out. It is going to be a busy summer so chances are rather slim :)
    I’ve recently gotten access to the elite section at tradingsystemsforex and currently looking thru the EAs offered there now and then.

  3. Matt
    June 25th, 2010 at 22:29 | #3

    the elite section is supposed to be filled with some very good EAs. I was reading recently about a commercial EA called FX Zapper that is supposed to be a direct rip off of an EA called Xbars or something that originated in that forum.

    As for the Gap stuff, It’s just occurred to me that one possible reason why I had poor results was because I didn’t use any indicators for testing if there was any trend towards a friday close or possibly as simple as RSI indicator. might help smooth out my results.

    At the moment I’m reading up on candlestick charts and a few books by Steve Nison. hoping to write a few scalping EAs based on price action and candlestick patterns, then research more on trends and swings etc. for longer term trades with higher profits.

  4. Steph
    June 26th, 2010 at 21:53 | #4

    I just got the Forex Gap Robot you mentioned in your article. 125 pips this week. Thanks!

  5. June 27th, 2010 at 11:44 | #5

    Yeah, it is a bit hard to find the great ones thou, there are so many… I’ve chosen to focus on XBars, Channel Scalper and RSI Multi-channel scalper right now. I’ve shifted my focus from long term strategies towards more high-frequency, feels safer not to be in the market all the time right now. Probably will check out MasterMind and Daily MA Scalper also.

    Yeah, I think it is important only to trade gaps that have occurred in opposite of an eventual trend. Also I would be inclined to wait for confirmation that the gap is closing before jumping in (say that 20% of it already have closed) and perhaps it would be wise to take partial profit at half gap closed or something like that. Oh and I don’t think it is wise to trade if the gap is either too small or too big, and it is probably best to trade multiple pairs (if gaps are present) to spread risk.

  1. July 3rd, 2010 at 07:40 | #1
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