Showing posts with label online forex. Show all posts
Showing posts with label online forex. Show all posts

Thursday, January 1, 2009

Gaps in the Forex Market


One of the main differences between a stock market and the FX market is that the FX market is a true 24 hour a day market. Trading is continuous around the clock and really only is closed on weekends due to the lack of volume rather than an actual close.

The result of this is that you very rarely see gaps on the FX related charts. A gap is when the open of one session is far enough away from the previous close to leave an actual gap on the chart. There can be many gaps on stock market related charts since the market stops trading late in the afternoon and will not reopen until early the next morning.

If a company’s earnings are released after the close, the next day’s opening price can be much higher or lower than the previous close. Any news item that causes a shift in the opinion of the value of the market can result in a gap on the chart. In the FX market, you do not see these gaps during the week as the market is open and trading. However, you can see gaps between the Friday closing price and the Sunday open

week’s trading is a good example as the chart below notes a gap as a result of the G7 meeting over the weekend. You can find more on the G7 meeting at www.forexgen.com, but the chart shows that the EUR/GBP opened much lower on Sunday than it closed on Friday. When you see a gap on a chart, the first thing traders will look for is for the market to move back to fill the gap

Wednesday, February 27, 2008

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