Gaps: How do you cope with them?

[ruseneca]

I am really interested to know how you colleagues cope with market gaps when they occur.
Last night, several seconds after FOMC meeting and discussions about the fiscal policy, I experienced a market gap worth 38 pips on EUR/USD as soon as my pending order was triggered. Instead of executing my stop loss at the set price, my broker did that at the first available price which was 38 pips away. My account just passed away ( with a negative balance which was covered by the broker ).
Almost 3 out of 5 orders are slipped because of gaps.

How do you cope with such gaps?!

 

[workitout]

I am really interested to know how you colleagues cope with market gaps when they occur.
Last night, several seconds after FOMC meeting and discussions about the fiscal policy, I experienced a market gap worth 38 pips on EUR/USD as soon as my pending order was triggered. Instead of executing my stop loss at the set price, my broker did that at the first available price which was 38 pips away. My account just passed away ( with a negative balance which was covered by the broker ).
Almost 3 out of 5 orders are slipped because of gaps.

How do you cope with such gaps?!

slippage, common issue. some brokers make it raw, while many other put into rough manner. normally changing brokers would minimize the gap occur, try to find news trading friendly brokers. hidden TP SL may another option, or use custom script to execute your entry (in case scalping). last resort, avoid trade during news, while you see broker's trading condition insufficient for such.

 

[iMusingKiMi]

slippage, common issue. some brokers make it raw, while many other put into rough manner. normally changing brokers would minimize the gap occur, try to find news trading friendly brokers. hidden TP SL may another option, or use custom script to execute your entry (in case scalping). last resort, avoid trade during news, while you see broker's trading condition insufficient for such.

Still, I remember I do post a word sounds "KURTOSIS". The meaning of this word is "peakedness" of the probability distribution of a real-valued random variable. Usually on price action trading, I don't take this as a move because there aren't actually real trading activities or real interest exist. But I will advise delete all pending if such high impact news occurs, for instance NFP, ECB, Bank Interest rates etc. Not worth to trade during this kind of event. Firstly, you are lack information of real interest between buyer or seller. Secondly, it can easily take your hard earned pips if it goes wrong.

 

[jkm]

Great thread. I am learning from it too. I hate gaps very much and would like to minimize them as much as I can.

 

[jkm]

I am really interested to know how you colleagues cope with market gaps when they occur.
Last night, several seconds after FOMC meeting and discussions about the fiscal policy, I experienced a market gap worth 38 pips on EUR/USD as soon as my pending order was triggered. Instead of executing my stop loss at the set price, my broker did that at the first available price which was 38 pips away. My account just passed away ( with a negative balance which was covered by the broker ).
Almost 3 out of 5 orders are slipped because of gaps.

How do you cope with such gaps?!

I was going through another forum yesterday and I saw suggestions that in order to avoid slippage,one should keep changing brokers. Do not stick to one broker for too long.

 

[workitout]

KURTOSIS, never heard before but reading it's while search on google kinda interesting name, nice words, good for any domain name too.
but not all traders hate news release, at my local traders community they even gather during NFP release . and they all use martingle sequence, a cut switch order. it's true volatility during news can easily wipe out pips, but not enough to stop several trader from trading during news. well sometimes it's kinda challenging to ride higher wave .

 

[stephane]

1-If you do not like gaps, do not trade around news time.

2- Consider gaps as supports/resistance areas.
Practical exemple. I have a gap at aundnzd this week end under a resistance. I plan to add on longs when/if we will restest it and there is a new short signal. We are right now in the Asian session and the spread is around 3,2 3,5 (with Tickmill) for an ADR of 96, it may be even lower with London opening.

 

[ruseneca]

2- Consider gaps as supports/resistance areas.
Practical exemple. I have a gap at aundnzd this week end under a resistance. I plan to add on longs when/if we will restest it and there is a new short signal. We are right now in the Asian session and the spread is around 3,2 3,5 (with Tickmill) for an ADR of 96, it may be even lower with London opening.

I like gaps, especially when they are in my favour. BUT I am trading conservatively and I never open orders for the weekend, for example. I am aware that there are such type of traders but this is a pure betting as we cannot predict the direction and gap's depth.
Anyway, we were discussing the slippage. I am trading with OctaFX and I see that there are lots of cases at FPA regarding this issue. The slippage is a real problem especially when it comes to scalping.

I was going through another forum yesterday and I saw suggestions that in order to avoid slippage,one should keep changing brokers. Do not stick to one broker for too long.

That's correct. The slippage is a consequence of poor liquidity but it must not be the reason to change the broker.

 

[EURUSD]

1-If you do not like gaps, do not trade around news time.

2- Consider gaps as supports/resistance areas.
Practical exemple. I have a gap at aundnzd this week end under a resistance. I plan to add on longs when/if we will restest it and there is a new short signal. We are right now in the Asian session and the spread is around 3,2 3,5 (with Tickmill) for an ADR of 96, it may be even lower with London opening.

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It is good consideration when traders didn't want to get problem with gaps because it is unsolved condition when there is gap in trading during news. Mostly, price will move in wild movement so there is slippage in executing order although in some brokers, when you setted Stop Loss then it is rarely happening to get additional losses except the price movement is too fast. If you don't want to experience that, simply don't trade when there is high impact news especially FOMC and NFP news.

 

[nahiyar]

With gap trading I make good profits . One can get idea after gap either market will go up or down then he can set his trades accordingly . I cope with this technique by using money management techniques so that I will not loose much if market is not in favor.