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Gap Trading, What Happens When Price Skips

Gaps occur when price opens significantly away from the previous close, leaving a hole on the chart. In forex, gaps are most common around weekends, but they can happen on other instruments too. Types of gaps:

- Common gap: small, often filled soon
- Breakaway gap: occurs after a consolidation, signaling a new trend
- Continuation gap: appears mid-trend
- Exhaustion gap: appears near the end of a move

Typical approaches:

Gap fill: expecting price to return and fill the gap. Many small gaps do fill, but not all, and some take a long time.

Gap and go: trading in the direction of the gap when it comes with strong momentum and news.

How to approach it:

1. Identify the cause. Was there news? A gap with a clear driver is more likely to continue.
2. Wait for the first 15 to 30 minutes to see how price behaves.
3. Look for structure confirmation. Does price hold above or below the gap area?
4. Use clear stops. Gaps create volatility.
5. Reduce size, since spreads and slippage may be larger.

Warning: expecting every gap to fill is a dangerous assumption.

Study ten gaps on your chosen pair. Record how many filled, how fast, and under what conditions. Observation beats assumption.

In spot FX the weekend gap is the main one, and it is usually small, a few pips on the majors, because quoting resumes in stages from Wellington on Sunday evening European time, and prices rarely jump far without a reason. The big exceptions come from weekend events, an election result, a referendum, a surprise policy announcement, or a geopolitical shock.

That supports your point 1. A gap with a known weekend driver deserves respect, because it reflects a real change in information. A small gap with no news behind it is often just thin early liquidity and tends to fill in the first hours of Asia.

On point 5, the first half hour after the Sunday open is when spreads are at their widest of the week. Even if you are confident in the fill, I would not enter until spreads are back to normal, which on the majors usually takes until Tokyo is properly open.

Weekend gaps are the type forex traders meet most often. One practical note: gap size can differ noticeably between brokers, because Sunday open prices depend on each broker's liquidity providers, and the first quotes are often thin and wide.

So statistics about how often gaps fill are best collected on your own broker's data, and from the first liquid hour rather than the first tick. Holding positions over the weekend also means stops can be filled at the gap open rather than the stop price, which is worth remembering for sizing.

Measuring from the first liquid hour, as FXS Prop Desk suggested, changed my own numbers quite a bit. Counted from the first tick nearly every gap looked large, while from 23:00 London on Sunday the picture is calmer and more useful.
The chart is a made up 26 week EURUSD tally that mirrors the shape of my notes rather than exact data. Of 19 gaps under 10 pips, 15 filled before the London open on Monday, while only 2 of the 7 larger gaps did.

The two biggest bars both had a weekend story behind them, which matches what LondonNewsTrader said about drivers. Neither came close to filling that day, and fading them would have been the worst trade of the month.

So my rule is simple: a small gap with no news gets faded only after spreads normalise, and only back to the Friday close. Anything of 10 pips or more, or anything with a known driver, I leave alone until London has traded for an hour.

Has anyone compared fill rates between brokers on the same weeks? I would expect the small gaps to differ most, because a pip or two of quote difference is a big share of a 5 pip gap.