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Alison Heyerdahl
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Alison Heyerdahl
Edited by
Alison Heyerdahl
Head of Content

Alison Heyerdahl is the Head of Content at FxScouts and a financial writer with extensive experience in Forex trading, broker analysis, and market research. She has reviewed 100+ brokers, publishes weekly YouTube trading videos, and co-hosts the “Let’s Talk Forex” podcast to help traders make informed, safe decisions.

Learn more about Alison Heyerdahl
Author
Author
Chris Cammack
Partner Manager and Financial Writer

Chris Cammack is the Partner Manager and a financial writer at FxScouts. Chris builds and maintains our relationships with our partners to provide our users with the best Forex trading experience.

Learn more about Chris Cammack

Forex Gap Trading

Reading time: 3 min | Intermediate | Technical Analysis | Trading Strategy

Unlike with the stock market, which trades for set hours every weekday, the Forex market trades 24 hours a day for five days of the week.  The weekend break leaves an opportunity for prices to move while the market is closed which causes a gap between the closing prices and the opening prices. But gaps can be created for other reasons as well, and they give traders trading opportunities.

When trading forex gaps, there is little concern about what or by whom, because traders are just using technical chart analysis to see the trends. In this kind of trade, a trader doesn't need to read up the news or be aware of the context surrounding the cause of the gap.

What is a Gap?

A gap is when a currency pair opens the day (or any other time unit measurement) above or below the previous closing price. Usually, gaps happen over the weekend, at the opening of the new trading week, and occurs when the Monday opening price is significantly different than Friday's closing price. However, gaps can also form in the middle of the trading session during releases high-impact economic news, as liquidity dries out and causes gaps in price.

Figure 1: Gap Up

Figure 1: Gap Up

Not all gaps look the same, as the reason for them forming can be different.   Gaps have different shapes; some are larger than the others.  Traders can profit from trading on the opposite side of the gap, as the gap is filled, as well as in the direction of the gap. There are four main types of gaps that exist.

Figure 2: Gap Down

Figure 2: Gap Down

Type of Gaps

There are four types of gaps seen frequently in the markets. Common gaps, breakaway gaps, runaway gaps and exhaustion gaps. Let's look at these in more detail.

Common Gaps

As the name suggests, they occur frequently. A common gap has no real fundamental reason for existing in the market and is more just a psychological effect that happens when the market consolidates. Most common gaps are filled the same day they are made.

common gap forex

Breakaway Gaps

Less frequent than the common gap, a breakaway gap is not likely to be filled in the short-term.  However, it could get a partial fill. A breakaway gap will first have a consolidation period, where price activity stays within a trading range as the market agrees on a price. The breakaway from this trading range can cause a gap in price either above or below the range which can be due to either some news events or because of supply and demand imbalances. Most of the time the Breakaway gaps occur at the beginning of a new trend.

breakaway-gap

Runaway Gaps

The Runaway Gaps are also known as the Continuation Gaps because they don’t get filled, and the market tends to trade in the direction of the gap. Runaway Gaps happen during a strong trend and occur in the middle of the trend as it shows a high level of interest from market participants. The Runaway Gaps also work as great support and resistance levels in the direction of the prevailing trend.

runaway-gap

Exhaustion Gaps

Exhaustion Gaps are a reversal signal as they happen at the end of a trend. Exhaustion Gaps are caused by traders fear of missing the trend. The traders who missed the trend find it difficult, as a strong trend will not give traders many opportunities to break in. As the trend develops, traders who missed the start of the trend will jump in - creating a buying/selling hysteria right at the top/bottom which exhausts the price - hence the name exhaustion gaps.

exhaustion-gap

Important Notes When Trading Gaps

Keep in mind that not every gap is tradable. The main factor to consider when trading gaps is to ensure you have enough of a profit margin.  In the case of common gaps or breakaway gaps, the actual gap needs to be big enough. Otherwise, the risk to reward ratio suffers. Traders should only look to trade gaps that are at least in the 40-50 pips range.

Another important note - time matters. If the gap doesn’t get filled in the first few hours, there is a high probability that the market will continue in the direction of the gap. Once traders become familiar with the different gap types, they will have the opportunity to find their strategies for gap trading.

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Meet the Experts Behind Our Unbiased Reviews

Chris Cammack

Partner Manager and Financial Writer

Chris Cammack
Chris Cammack is partner manager and senior financial writer at FxScouts, specialising in broker relations and forex market analysis. As the former Head of Content (2019–2024), he set editorial standards for all content published at FxScouts, including broker reviews, broker comparison pages and education. With over a decade of experience in editorial management and partner relations, Chris builds and maintains our relationships with our partners to provide the best Forex trading experience for our users. He also co-hosts the “Let’s Talk Forex” podcast with Alison Heyerdahl, where he explores trading strategies, industry news, and macroeconomic trends to help traders navigate the markets with confidence.

Alison Heyerdahl

Head of Content

Alison Heyerdahl
Alison Heyerdahl is the Head of Content at FxScouts and an experienced financial writer with extensive hands-on experience in the Forex trading industry. She specialises in Forex trading, broker analysis, and market research, with a focus on helping traders navigate the complex world of online trading safely and confidently. Alison has tested and reviewed more than 100 Forex brokers, assessing everything from regulatory status and trading conditions to platform features and customer support. Her goal is to provide honest, detailed, and practical insights that traders can rely on when choosing a broker. She’s also produced more than 100 educational videos for the FxScouts YouTube channel, where she explains trading concepts in a clear, accessible way. As the co-host of the “Let’s Talk Forex” podcast, Alison shares expert commentary on broker reliability, trading strategies, and market developments—always with a focus on transparency and trader protection.

Ida Hermansen

Financial Writer

Ida Hermansen
Ida is a financial writer with a passion for cryptocurrencies, blockchain networks, and Forex trading. A dedicated crypto trader, she developed a deep interest in Forex technical analysis and price action, continually expanding her expertise in market trends and trading strategies. With a background in digital marketing, SEO, and content strategy, Ida combines her analytical skills with clear, engaging writing to help traders navigate the ever-evolving financial markets. She stays up to date with the latest Forex and crypto developments, researching the best trading environments for new and experienced traders alike.

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Financial Writer

Stefan de Clerk
Stefan is a financial writer and Forex trading enthusiast with over a decade of experience creating in-depth content on finance and technology. His deep interest in geopolitical events, big data, and market sentiment fuels his passion for analyzing how global factors shape financial markets. With a background in marketing and financial research, Stefan believes that Forex trading offers the best insight into the pulse of the world economy. Committed to delivering well-researched, unbiased, and objective information, he helps traders navigate the markets with clarity and confidence.
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