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Gaps and their causes


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Gaps and their causes

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  #1 (permalink)
 lazyboy 
Bratislava Slovakia
 
 
Posts: 5 since Sep 2022
Thanks: 39 given, 1 received

Hello!

I am a young aspired trader and I would like to begin a thread on futures gaps. For me the questions are simple but I think a lot of people want to know much more ( including me ).

How is a gap after the weekend created?

How is it possible in the terms of order flow and depth of market to open the market at a different price than it’s close?

Also a really important question is: when a gap is created, is your order filled or just skipped?

I would really appreciate any answer and possibly a start of a new insightful thread on this forum.

Thank you so much.

I am looking forward to adding towards this community and getting any feedback or answers would be really appreciated .
Thank you so much again and have nice one!

PS: any literature regarding market gaps or any literature regarding futures markets will be thoroughly read and analysed

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 forgiven 
Market Wizard
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In general terms there is a imbalance in orders that the market maker has received that have to be execute at the open . does it skip over your stop . no your stop is part of the imbalance . it will be execute according to your place in line . you will not like the fill price . why does it happen ? there is information that was not available at the close and or price is very close to a large number of stop orders to get in or out of the market . there are 4 general types of gaps, breakaway , continuation , acceleration , and exhaustion . there are more rarer types like a island reversal among others . you can find all the information you need by using search or u tube , I would not buy and courses or software to learn and trade them . there is plenty of free stuff . hope it helps

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  #3 (permalink)
 lazyboy 
Bratislava Slovakia
 
 
Posts: 5 since Sep 2022
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forgiven View Post
In general terms there is a imbalance in orders that the market maker has received that have to be execute at the open . does it skip over your stop . no your stop is part of the imbalance . it will be execute according to your place in line . you will not like the fill price . why does it happen ? there is information that was not available at the close and or price is very close to a large number of stop orders to get in or out of the market . there are 4 general types of gaps, breakaway , continuation , acceleration , and exhaustion . there are more rarer types like a island reversal among others . you can find all the information you need by using search or u tube , I would not buy and courses or software to learn and trade them . there is plenty of free stuff . hope it helps


Thank you for the clarification.

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 CT12 
San Diego, CA
 
Experience: Intermediate
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Posts: 3 since Aug 2019
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The late Tom Williams was a syndicate trader, a smart money insider. He wrote the book “Undeclared Secrets That Drive the Stock Market” where he describes how the smart money manipulates the markets. There is some good discussion on gapping in the book if you’re interested, it applies to futures as well, here is a brief quote:

“However, we do need to recognize what professional traders will do to better their
trading positions. Gapping up or gapping down, shake-outs, testing, up-thrusts, on good
or bad news, are all money-making maneuvers helping the market makers to trade
successfully and at your expense….”

There is a newer 3rd edition of the book renamed to Master the Markets, the pdf format is free online.

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  #5 (permalink)
 lazyboy 
Bratislava Slovakia
 
 
Posts: 5 since Sep 2022
Thanks: 39 given, 1 received

Thank you, I will read it for sure.

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