If you analyze the price movements of the major trading instrument, you might find some gaps. During the market movement, the price of an asset often creates small gaps. These gaps are usually ignored by novice traders. But the professional traders use this gap to make significant progress in their life. Making significant progress in the trading profession is a very tough task. Unless you systematically take your trades, it will be really hard to change your life. You have to take advantage of the minor details of this market and only then you can succeed as a trader.
So, is it possible to take the trades by using the market gaps? The obvious answer is YES. In this article, we are going to give you some amazing tips which will help you to trade the major gaps like a pro trader. Without any further delay, let’s jump into the details.
Identifying the gaps
Identifying the gaps is the most important factor for the trading profession. If you identify the gaps in the lower time frame, you may ignore these gaps. In a lower time frame, you will find frequent gaps and those are very hard to trade. But if the gaps are formed in the daily or the H4 time frame, you can take huge advantage. In general, the gaps indicate the market is going to create a strong support or resistance level. Traders usually consider the gap as support and resistance to taking their trades.
Support and resistance level
If the gap is not covered within 2 candles, you may consider the gap as a barrier. So, if the gap is in the upside direction, you may expect that the price of the asset will fall. On the contrary, if the gap is in the downside direction, you may expect the price of the asset will rise. Before you take any trades by using the gaps, we strongly recommend using the CFD demo account. By using the demo account you should be able to curate a professional trading strategy and thus you will find many profitable trade signals.
Use the price action confirmation signals
Once you have identified the support or resistance level by using the market gap, you may use the price action confirmation signals. By using the price action confirmation signals, you should be able to open a new trade with strong confidence. Moreover, you won’t have to use a wide stop loss. But be careful with the trade execution process since you never know what will happen to this market. Just because you have mastered the price action trading strategy doesn’t mean you will be winning most of the trades. Be prepared to embrace the losing trades.
Use trade filter
To find the best trade signals, you should also use the indicators. Indicators work as excellent trade filter tools during the execution process. So, if you use the gap in the market, make sure you take the reading from the indicators. If you get confused after taking the data reading from the indicators, it would be best if you ignore the specific trade signals. Never think you will be winning the trades just because you are taking the trades with the gap. Always be prepared to deal with unexpected issues and it will help you to make the right decision in the trading business.
Trade with confidence
To trade the gap, you must have strong confidence. If you don’t trade the market with strong confidence, you will never be able to take advantage of the market gap. Study the basics of the market and gain strong confidence. Never lose faith in your trading system. At times you might have to lose few trades in a row and this is very normal. Consider the losing trades as a part of your trading business and find the next potential trade signals.