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Utilizing Gap Strategy When Markets Open at the Beginning of the Week

Gaps that frequently occur at the beginning of the week when markets open pose a challenge for many traders, who tend to avoid holding positions over the weekend. However, these gaps can also be leveraged as profitable trading opportunities. This article will discuss the background of the emergence of gaps at the beginning of the week and provide strategies to capitalize on them as part of a trading plan.

Emergence of Gaps at the Beginning of the Week:

Gaps, or price gaps between candles on a Candlestick Chart, often occur at the beginning of the week when markets open. This is due to increased volatility resulting from economic or political events that occur over the weekend when the forex market is closed. These factors can affect the value of a country's currency, leading to gaps where prices jump up or down without any transactions occurring in between.

How to Utilize Gaps at the Beginning of the Week:

  1. 1. Placement of Pending Orders:

    • Before the market closes on Saturday, place pending orders such as Buy Stop 10 pips above the last price and Sell Stop 10 pips below it.
    • Determine a Target Profit of around 20 pips for each order.

  2. 2. Checking Pending Order Positions After Market Opening:

    • After the market opens on Monday, check the positions of triggered pending orders.
    • Cancel pending orders that were not touched.

  3. 3. Exploiting Fast Movements:

    • Taking advantage of the brief moment before the market closes and after it opens allows traders to gain quick profits.

Weaknesses and Considerations:

  • A weakness of this strategy is the requirement for readiness to engage during late-night or early morning hours depending on the market's time zone.
  • As an alternative, traders may choose to close all positions over the weekend to avoid gap risks.

Leveraging gaps at the beginning of the week can be a profitable strategy, but it requires discipline and readiness to engage during specific hours. Traders need to consider whether they are more comfortable avoiding gaps by closing positions over the weekend or intentionally capitalizing on them by placing positions just before the market closes. Overall, there is no one-size-fits-all approach, and traders should carefully evaluate their risk tolerance and trading preferences.


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