Thread: Wanted gap trading EA

I am still a babycoder.

Still learning and now comes MT5 in addition to all.

When there is a small mod to create I could ask my coder friends but a new proyect is overly much as we all are very busy at the moment.

Anyhow I am interested to see how the ones you posted play, also thanks for the hint to Parazite.

I just trade the difference to fill, nothing else, than other approaches come in play.

Originally Posted by ;

Hi Cobra,
I intend to just trade manually too, just use the EA for optimising SL, TP, TS etc. ....

Originally Posted by ;

I am still a babycoder, lol.

Still learning and today comes MT5 in addition to all.

When there is a little mod to create I can ask my coder friends but a new proyect is overly much as all of us are very busy at the moment.

Anyhow I am curious to learn how the ones that you posted play, also thanks for the sign to Parazite.

I only trade the difference to fill, nothing else, compared to other approaches come in play.

Really, when I think of this, if I trade in the direction of this trend, no matter of what the difference does, then I am not really taking any benefit of the weekend difference; I might equally well choose to follow the tendency from the start of Tuesday's daily candle!

I've proved to myself that the difference direction is largely irrelevant to which direction the trade will go; it consistently follows the tendency!

So, it seems I've got two options:-
1. Trade mechanically in the contrary direction of this gap, using SL=100/TP=40, expect in the numbers and make money by trading more than two lots, or

2. Place trades only in the direction of this trend, utilize bigger TP=100-200 and make money by being right most of the time, utilizing mini-lots.

Hmmmm... let me think!

Regards,


Mike

PS. Regarding coding an EA I understand - it has to take a while. Thank you for the deal.

Should you trade contrary to the open gap and not from the path to fill it you will have 85% chance to be wrong, at least until it gets stuffed.

Originally Posted by ;

should you trade contrary to the open gap and not in the path to fill it you will have 85% chance to be wrong, at least till it gets filled.

Hi Cobra,
What do you mean by against the open difference? Do you really mean in the contrary direction to the difference management?


Mike

Well, when we are talking about gap trading we discuss the close of the gap.

There are some smart heads that made a statistic that says that 85% of weekend gaps get filled earlier or later.

Now I hear already from all sides that gaps don't exist in FX and that's right for banks but our lazy retailbrokers compel us to have BBQs and some Scotch and/or Guinness in the weekend and don't enable us to trade.

I just picked one that was really broad but it's to explain how this works.

You see the blue line that marks friday close along with a massive gap to our platform open on sunday.

To exchange the gap you would really like to exchange in the direction of the red arrow because you expect that in any given time this gap will get filled and it had been the case.

Is that clear?

Hi Cobra,

I would be grateful of your findings, even if you've got a spare minute, on which trade (in the oppposite direction to the gap direction, with SL=100, TP=40) or at the direction of the price trend, irrespective of the gap direction, (SL=100, TP=100) makes most cash from the connected GBPUSD chart.

I wrote down 11 weeks transactions GBPUSD, using the mechanical method of trading in the opposite way to gap direction, with SL=100, TP=40 and had just one drawdown of -100 pips, that is a 90% success.

This success rate might not apply to pairs because each has it's own daily rate of motion, so SL TP may need to be altered so. Surely, over the exact same period EURUSD had three -100 losses and USDCAD has -700 pip drawdown, so this mechanical method isn't usable across all currencies with only one SL TP level. In the event of the declines across e.g. 10 pairs lineup at the exact same time, it's yelling gnashing of teeth time!

I did note the GBPUSD trade that dropped went against the tendency on 17th Aug.. Gap was down (the transaction would have been BUY) but was the fad and the two went in opposite directions! If you set up a daily chart, using vertical lines on a number of Sunday opens, and utilize it on 10 distinct pairs, you will probably observe that the losing transactions almost always went against the tendency, which I guess figures...

I've marked the Sunday opens with vertical red lines (the Friday bars are those to the left). My broker is Alpair UK who's GMT 1.

The Daily bars often don't reveal if price strike SL or TP first, which explains why I want the EA to work on any timeframe.

I will continue to look at how the mechanical system may be used on other pairs, but maybe not havng an EA to get testing means it's a SLOW task...

that I hope that you find this information useful and if you have some suggestions for improvement, they would be most welcome.

regards,


Mike

Here's another chart pic with difference instructions marked with yellow arrows along with the 17th Aug trade indied with yellowish X

Hope they're better compared to the preceding one.


Mike

Noticed some arrows have been 'missing', as has the yellowish X, but I trust you can make sense of what remains. It appears that basically, if the gap is below the 10SMA SELL, also if above BUY and if it is at the bottom /top of a curve, then the Stochastic can function as tie-breaker. However, why wait until Sunday to set trades if gap direction isn't significant?

Originally Posted by ;

Well, if we are talking about gap trading we discuss the finish of the gap.

There are some clever minds which made a statistic that says that 85 percent of most weekend openings get filled earlier or later.

Now I hear from all sides that gaps don't exist in FX and that is ideal for banks but our lazy retailbrokers force us to have BBQs and some Scotch and/or Guinness in the weekend and don't allow us to trade.

I simply picked one that was really broad but it's to explain how this works.

You see the blue line which marks friday near and a.. .

Hi Cobra,
Yes, quite clear, thanks. Howevev, because film, if you were to exchange the trend rather than the gap you may create more profit, and earlier. Am I correct? How many pips over the gap and how many pips below?

Just think, while bankers sweat over the weekend, it enables us as you rightly see, to indulge in the finer points of existence. I'll bet they take their Blackberrys to the toilet also!! Me? Only 'Private Eye'!

Cheers,

Mike

Sure Mike, you have all the motives but than that I wouldn't call it Gap trading, let us call it Blue Monday trading roughly.

Enormous gaps are largely formed by weekend events like meetings etc and will give the market good reasons to react further on it throughout the first days of this week.

Originally Posted by ;

Hi Cobra,
Yes, quite clear, thanks. Howevev, because film, if you should exchange the trend instead of the gap you will create more profit, and sooner. Am I correct? How many pips above the gap and how many pips below?

Just think, while bankers perspiration over the weekend, so it enables us, as you rightly see, to indulge in the finer things of life. I will bet they even take their Blackberrys into the toilet too!! Me? Only 'Private Eye'!

Cheers,

Mike

Originally Posted by ;

Sure Mike, you have all of the reasons but than I wouldn't call it Gap trading, let us call it Blue Monday trading roughly.

Big gaps are largely shaped by weekend events such as meetings etc and can give the market great reasons to respond further on it throughout the very first days of this week.

Hi Cobra,
You are right, what I am doing should not really be called Gap Trading; I am not looking merely to fill the gap, I am looking to go beyond it. It's my version of difference trading!

I will keep you edued how I am doing.

Enjoy a Fantastic weekend,

Cheers,

Mike