We are pleased to announce that we have another trader pass our funded trader program! Like many who come through the funded trader program, Marco has a very interesting story to tell. He also has a lot of interesting advice that anyone serious about succeeding in the funded trader program should consider following.
Like many who come to us, he started with equities before considering our forex funded trader program. Actually, his reasoning for considering forex is what got me interested in looking into the other subject matter: market gaps.
It is often said that there is no risk of market gap ups and gap downs in forex. This is tends to be true for the reasons that Marco states. Other markets, equities and commodities tend to have closing times (a little different when you consider futures, but that's a little different) unlike forex so they will have gaps up and down when the do open.
However, does this mean forex really does have 0 market gaps? When you embark on the your funded trader journeys will not have to consider them?
First, let me define a gap. A gap is a sharp break in price where there is no trading in between the two points.
But you are likely encounter gappage in 3 scenarios:
1] Super short time frames it can occur because things happen so fast, but assuming you're not running a discretionary trader rather than an algorithmic trader, you probably won't be running on the minute time frame. You likely won't be looking at the minute time frame if you're a part timer.
2] The weekend, contrary to the popular myth the forex market is open 24/6 not 24/7. So there is scope for gappage to occur. The market closes at 10pm on Friday (UK time) then resumes 10pm Sunday (UK time), so you could experience gappage around then if something changes suddenly.
3] Major news events, if something extremely unexpected happens, the market can gap up, or down. The risk with gappage is that it can cause slippage as spreads widen during news events. Something to keep in mind.
Now, forex is far more liquid than other securities; however, it is suspectible to gappage. But you're less likely to feel the pain compared to other securities. With equities, for instance, they are extremely common while with forex you'll probably be hard pressed to find them on majors- but you're likely to find them on emerging markets!
Without further ado, here is Marco's interview: