Welcome to our Free Course
Enhance your trading knowledge by studying our legendary free online program!
  • Beginner
  • Intermediate
  • Advanced
  • Completion
  1. Beginner
    Early Stages For Beginners
    8 Topics
  2. Forex Terminology
    11 Topics
  3. Margin & Leverage
    2 Topics
  4. Intermediate
    Identifying Scams
    2 Topics
  5. Brokers for Beginners
    5 Topics
  6. Technical Analysis
    13 Topics
  7. Advanced
    Using Indicators
    6 Topics
  8. Technical Analysis (Part 2)
    8 Topics
  9. Market Structure
    5 Topics
  10. Fundamental Analysis
    9 Topics
  11. Completion
    Risk Management for Beginners
    8 Topics
  12. Psychology for Beginners
    7 Topics
  13. Personal Psychology Questions
    2 Topics

Market Gaps

The reason why some traders choose not to hold their trades over the weekend is because there’s a possibility the market may not open at the price it closed, at 5pm EST Friday.

When that occurs and price is higher or lower than what it was when the market closed, it is referred to as a market gap. Price can gap up or gap down due to any economic data released during market close and the price has to reflect that when the market opens Sunday.

That can be anything from transactions still occurring, importing and exporting, news released, etc. Let’s say EUR/USD closed at 1.22400 on Friday and when the market opened Sunday, price was at 1.22140 creating a gap down. Major news that negatively impacted the Euro may have dropped or major positive news impacting the USD dropped during the weekend.

Some traders trade gaps by looking for profits from the fill of the gap. Keep in mind that price will fill these gaps but it does not have to happen within that hour, day, or week.

In the illustration below, you can see price gaped down from where it closed Friday. Eventually, price came back up to fill in the gap.

Market-Gap-Example