As you know, the forex market is open 24hours from Monday to Friday, market gap occurs when market opens on Monday at a price different from the price it closed the last Friday.
For example: GBPJPY closed last Friday at 137.448 and open today at 138.811 a whopping 137pips gap in the market.
Most times the gap is caused by an event during the weekend that made trader and investor have a certain perception of the market to the point of queuing high volume of orders before market opens, this as a result pushes price higher or lower because all the orders are getting executed almost immediately.
If you don’t understand yet, think of it this way: the land in Ibeju Lekki has been going up in price steadily just like every where else until Dangote got involved, then SUDDENLY price jumped up. Crypto trader are used to occurrences like this.
How to hande the Gap:
Day trader: Never leave trade over the weekend, close all your trades before market close on Friday.
Swing traders: Make sure your SL can handle such gap.
Always leave in your trading account what you can afford to loss, because sometimes market gap refuse to respect stop loss.
I hope you learnt something today?