Gaps and their causes

September 23rd, 2022, 12:59 PM

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

September 23rd, 2022, 07:46 PM

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

September 24th, 2022, 07:32 AM

forgiven

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.

September 28th, 2022, 05:43 PM

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.

September 29th, 2022, 12:31 AM

Thank you, I will read it for sure.

Gaps and their causes

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Gaps and their causes