For those who are already trading in other markets, you probably know the price gap. & # 39; Gap & # 39; Price & # 39; Jump & # 39; From one price level to another without taking step-by-step measures to get there, for example, at the end of today You may be trading stocks that close at $ 10, but that's because of some event that occurs at midnight. It will open at $ 5 tomorrow and continue to decline for the rest of the day.
The gap introduces another uncertainty that can interfere with a trader's strategy. Perhaps one of the most worrying aspects of this is when traders use stop loss. In this case, if the stock price reaches $ 9 and the trader no longer wants to trade and makes a stop loss at $ 9, his trading will remain open all night, and tomorrow the trader will have more losses. Wake up he may have been ready.
If you look at some forex charts, you will notice that there is almost no price gap. Especially not long-term charts such as 3 hour, 4 hour, daily charts.
Forex: A note on volatility:
When prices fluctuate, trading opportunities exist. If you buy a share for $ 2 and stay there, you have no opportunity to make a profit. The magnitude and frequency of this fluctuation is called volatility.
As a trader, it is the volatility that you profit from. When high volumes and high liquidity are combined with fewer means of trading, daytime volatility increases in currency markets and can be exploited by day traders. The high volatility of the currency market shows that traders can earn five times more money from currency trading than trading the most liquid stocks.
Volatility is a measure of the maximum revenue that a trader can generate with full vision. The volatility of the most liquid stocks is 60-100. The volatility of currency trading is 500 [Source: Oanda]. In this regard, currency is a better trading instrument for day traders than the stock market.
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