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why does GAP occur in the market? in General Forex Discussion_67f83ac065b44

why does GAP occur in the market?

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GAP is indeed a mystery but the reason is the news on holidays.
#271 - December 13, 2022, 04:27:40 AM

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because there is an unusual shock and there is no need to worry about it
#272 - December 27, 2022, 06:08:17 AM

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Indeed, the gap can happen at any time, but we don't need to worry because we avoid it.
#273 - December 31, 2022, 05:15:51 AM

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why does GAP occur in the market? in General Forex Discussion_6803a6c52eb12
#274 - Today at 11:45:23 AM

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Gaps can occur in the Forex market when there is a significant difference between the closing price of an asset and the opening price of the next trading session. This can happen due to various reasons such as significant news events, political announcements, and economic data releases that can cause a sudden shift in market sentiment. Gaps can also occur due to low liquidity in the market during after-hours trading or weekends. In the Forex market, gaps are not uncommon, and traders should be aware of the potential risks and opportunities they present. Gaps can create significant price movements, which can be profitable if traders take advantage of them with a suitable trading strategy. However, traders should also be cautious as gaps can result in increased volatility and potential losses if not managed appropriately.
#274 - March 02, 2023, 02:01:08 PM

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I don't know about this problem, but it just happened more than once.
#275 - March 05, 2023, 04:23:54 AM

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maybe there is a gap that makes the market exist like that
#276 - March 06, 2023, 10:06:37 AM

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If you notice that GAP often occurs when there is big news on Friday, for example, this week there is NFP and we will see on Monday there is a GAP in USDX.
#277 - March 13, 2023, 11:03:04 PM

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because indeed at the opening we will always find this and it is common
#278 - March 14, 2023, 12:25:45 AM

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There are many reasons here especially the problem of very important news that we have to face
#279 - March 17, 2023, 03:54:50 AM

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Gaps occur in the market business due to unexpected events, news or economic indicators, causing a sudden change in investor sentiment and creating a price imbalance between the closing and opening prices of a trading session
#280 - March 17, 2023, 06:52:34 AM

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#281 - Today at 11:45:23 AM

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I heard that on Saturdays and Sundays there are actually market movements and sometimes they happen quickly, maybe that's what causes the GAP to occur on Mondays
#281 - March 26, 2023, 09:01:47 PM

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In the forex trading industry, market gaps are a common phenomenon that can occur for various reasons. A gap refers to a significant difference between the closing price of one trading session and the opening price of the next session. These gaps can occur during weekends, holidays, or even within a trading day. Understanding the reasons behind market gaps is essential for traders as it helps them analyze price patterns, anticipate potential market movements, and make informed trading decisions. In this article, we will explore some of the main reasons why gaps occur in the forex market.

1. Economic News and Events:
One of the primary catalysts for market gaps is the release of significant economic news and events. Key economic indicators, such as employment data, GDP figures, central bank announcements, or geopolitical events, can have a substantial impact on market sentiment. When such news is released outside regular trading hours, gaps can occur as market participants react to the new information. The difference in sentiment and expectations between sessions can lead to a significant price gap when the market reopens.

2. Overnight Trading Sessions:
The forex market operates 24 hours a day, five days a week, allowing for trading sessions in different regions around the world. When one trading session ends, another begins in a different time zone. During overnight sessions, especially when there is lower liquidity due to fewer market participants, gaps can occur. These gaps are a result of new information, market orders, or price movements that take place when one session closes and another opens.

3. Market Sentiment and Order Flow:
Market sentiment and order flow can also contribute to market gaps. Market sentiment refers to the overall mood or perception of traders and investors towards a particular currency pair or the market as a whole. If there is a sudden shift in sentiment due to unexpected news or events, it can lead to a gap when the market reopens. Additionally, large institutional orders or significant buying/selling pressure can cause price gaps as they quickly exhaust available liquidity at a particular level.

4. Weekend and Holiday Gaps:
The forex market is closed over the weekends and during certain holidays. As a result, any new developments or events that occur during these periods can lead to gaps when the market reopens. Factors such as geopolitical news, economic indicators, or significant events over the weekend can cause a gap between the closing price on Friday and the opening price on Monday.

5. Technical Factors and Order Execution:
Technical factors and order execution dynamics can contribute to market gaps as well. For example, if a price level or support/resistance zone is breached, it can trigger a cascade of stop-loss orders or new trading activity, resulting in a gap between the closing and opening prices. Additionally, gaps can occur when large orders are executed at market prices, quickly consuming available liquidity and causing price to jump to the next available level.

6. Low Liquidity Periods:
During periods of low liquidity, such as after trading hours or during holiday seasons, the market becomes more susceptible to gaps. With fewer participants and lower trading volumes, it takes less trading activity to create significant price gaps. Traders should be especially cautious during these periods as the lack of liquidity can result in increased volatility and wider spreads.

7. Trading Halts or Circuit Breakers:
In extreme market conditions or during periods of high volatility, exchanges may implement trading halts or circuit breakers. These mechanisms are designed to temporarily suspend trading to prevent disorderly market movements or protect investors from excessive volatility. When trading resumes after a halt, a gap can occur if there has been a significant change in market conditions during the suspension.

8. Market Manipulation:
While relatively rare, market manipulation can also lead to artificial gaps. Unscrupulous market participants may attempt to manipulate prices by creating gaps to trigger stop-loss orders or force other traders into unfavorable positions.
#282 - May 09, 2023, 03:20:14 AM

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Sudden changes in market sentiment can be the cause of gaps. For example, if the market experiences a strong bearish trend and suddenly there is a sudden change in sentiment to bullish.
#283 - May 29, 2023, 10:20:30 PM

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Gaps in the market are a common occurrence in the forex trading industry, and they can be attributed to various factors. Gaps arise when there is a significant difference between the closing price of one trading session and the opening price of the subsequent session. Several reasons contribute to the formation of gaps. Firstly, gaps can emerge due to overnight news or events that impact market sentiment. News releases, economic data, geopolitical developments, or unexpected announcements during non-trading hours can lead to a gap when the market reopens. Secondly, gaps can result from market expectations and investor sentiment. If there is a sudden shift in market sentiment or a change in expectations, it can create a gap between the closing and opening prices. Thirdly, gaps may occur due to changes in supply and demand dynamics. If there is a significant change in the balance between buyers and sellers during non-trading hours, it can lead to a gap in prices. Additionally, gaps can arise from technical factors, such as stop-loss orders or limit orders being triggered when the market reopens. These orders can create imbalances in the market, resulting in a gap. It's important to note that gaps can occur in both directions, upward (positive gap) or downward (negative gap), depending on the specific market conditions and factors at play. Traders should be aware of the potential for gaps and take them into consideration when developing trading strategies. Gaps can present both opportunities and risks, and traders should assess the underlying reasons for the gap and the potential impact on their positions. By staying informed, monitoring market conditions, and adapting their strategies accordingly, traders can navigate gaps effectively and capitalize on market movements.
#284 - June 01, 2023, 11:46:47 AM

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