Gap Trading- Top Advantages You Must Notice
Forex exchange is trading which is very popular for making money these days. Different strategies are being used since its nature is unforeseeable. These strategies help determine when it is best to make an investment and make more money using the system. Among the many methods today, gap trading is one most used in the investment market. One of the best things about this is that it is very easy to use. It gives the investors that change to enjoy the gap price from one day to another.
To help you have a better understanding of gap trading, below are the top advantages it can offer you. Take a close look at them below.
1. One advantage of this method is that the price is set before closure. This would simply mean that price is set before the market closes which can be lower, higher, or remain the same the next day. This strategy has been used by many people who are enjoying success trading. Despite the fact that involving in Forex trading always comes with risk, you will still be able to enjoy success in the end. This is especially when you know the gaps and use all the information you have to your greater advantage.
2. When the traditional market has open and closure, this is not the same as Forex. This trading trades 24/7. But, there are still many people who claim that they can make money using the gap trading strategy.
3. Forex specializes in “spread”. This would simply mean that the price incorporates the transaction cost. Spread then is the gap between the selling price and the buying price. Forex offers high liquidity. In other words, you can shift a considerable amount of money in and out of the foreign currency together with the lowest price movement.
4. Another advantage that you can enjoy with gap trading is that there are zero restrictions. So, you will not have a hard time purchasing a currency pair once you feel that its value is increasing. Then, you can also easily sell it if you feel the other way around can happen.
5. Finally, leverage can be used in Forex trading. This means that you can actually trade more money than what you actually have in your account. Leverage of 50:1, for instance, would mean you can trade $50 in the market for every 1 dollar in your account. So, you can control a higher trade with lower capital.
When you are using the gap strategies, there are some terms you will come across. One is gapping up which means that the opening is higher compared to the closing the other day. Another is gapping down means the other way around. The opening level tends to be lower than yesterday’s closing level. But if the price is similar, then no gap occurs.
So, these are the different advantages that you can sure experience when you make use of the gap method. And, you can expect more to enjoy once you use the acquired information properly.