Gaps/hacks in the charts and can one avoid them?
I think they are called overnight gaps or weekend gaps, caused by when market is closed but trading in thin markets overnight by banks change prices as far as I know.
To avoid them some people don't hold positions or use low leverage/exposure/lot size. Maybe some people use larger SL and TP or somehow find trading rules that avoid them I do not know
Looked through several pages, couldn't find anything that fits the bill, unfortunately 😞
You're giving the answer yourself: if this happens on a regular basis ("always" near blow my account..."), we're obviously not talking about once-in-10-years flash crashes, but usual weekend gaps or those overnight gaps (often meaningless on low volume). So there is obiously something wrong with risk management.
Most gaps can't be predicted just like a majority of all news (or at least the impact they have) can't be predicted. Often gaps even happen without making no fundamental sense at all (maybe as a side effect of all the automated trading?). Whatever the reasons may be: the simple answers are (1) position size, (2) POSITION SIZE and (3) the possibility of chosing to stay out of the market before scheduled news events (whereas (1)+(2) should cover for unforeseeable events, which only leaves us with those rare real flash crashes (possible solution: not putting all money into a single account).
If on the other hand the position size is okay... so what? We lose a little bit and go on with the next trade.
Let's say you use the very common "1 percent of the account" rule for your risk per single trade (there might be better techniques, but that's another story...). If in this case a single trade kills your account, this means the gap size needs to be a hundred times bigger than your stop loss distance. Anwswer the question for yourself: How often does that happen?
And let's not forget that these "bogus gaps" also can act in your favour the other half of the time.
You're giving the answer yourself: if this happens on a regular basis ("always" near blow my account..."), we're obviously not talking about once-in-10-years flash crashes, but usual weekend gaps or those overnight gaps (often meaningless on low volume). So there is obiously something wrong with risk management.
Most gaps can't be predicted just like a majority of all news (or at least the impact they have) can't be predicted. Often gaps even happen without making no fundamental sense at all (maybe as a side effect of all the automated trading?). Whatever the reasons may be: the simple answers are (1) position size, (2) POSITION SIZE and (3) the possibility of chosing to stay out of the market before scheduled news events (whereas (1)+(2) should cover for unforeseeable events, which only leaves us with those rare real flash crashes (possible solution: not putting all money into a single account).
If on the other hand the position size is okay... so what? We lose a little bit and go on with the next trade.
Let's say you use the very common "1 percent of the account" rule for your risk per single trade (there might be better techniques, but that's another story...). If in this case a single trade kills your account, this means the gap size needs to be a hundred times bigger than your stop loss distance. Anwswer the question for yourself: How often does that happen?
And let's not forget that these "bogus gaps" also can act in your favour the other half of the time.
Thanks for the detailed, comprehensive answer. Many good pointers... would still be nice to be alerted when they happen I guess
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I have some questions regarding the picture below, depicting a gap/hack, whenever these occur, they always near blow my account or otherwise put my account in jeopardy. Hence I have the following questions:
1) Is there any way to predict these bogus gaps/hacks as on pic-related?
2) Is there a proper name for them?
3) What causes them in the first place
4) And most important of all, is there maybe some EA/indicator, that can alert one when they occur?