Many traders assume that price would close back on a gap since gapping markets tend to be overbought or oversold markets. Many traders see market gaps as a trading opportunity trading in the direction wherein the gap would be closed back. The i-Gap Indicator is a tool developed to help traders spot these opportunities better.
What is the i-Gap Indicator?
The i-Gap Indicator is a technical indicator which automatically identifies and indicates gapping markets. It indicates a gapping market by placing an arrow pointing the opposite direction as the gap.
The arrow points the opposite direction as the gap indicating the potential that the market price might close back the gap.
How the i-Gap Indicator Works?
The i-Gap Indicator has a very simple algorithm within its indicator script. It simply measures the distance between the open price of a candle to the close price of its preceding candle. It then compares the measured distance to the threshold distance predetermined by the user. The indicator plots an arrow indicating a gap whenever the distance between the open and close price is higher than the threshold distance.
How to use the i-Gap Indicator for MT4
The i-Gap Indicator has two variables which can be modified within its indicator settings.
The “Size Gap” variable refers to the threshold distance which the user predetermines. This is measured in points. Ten points is equivalent to 1 pip. As such, traders who measure distance in pips should simply add another zero to the pip value to convert it to points. Adjusting this variable modifies the sensitivity of the indicator in finding gapping markets.
The “Number of Bars” simply refers to the number of bars which the indicator would look back on to look for gapping markets.
The i-Gap Indicator can be used as a reversal signal indicator based on the concept of gapping markets closing back more often than not. However, it does not always follow that gapping markets would close back. Instead of opening a trade as the signal candle appears, traders could instead set a stop order on the edge of the candle and wait for it to be triggered.
This trading technique is best used on the lower timeframes during market opens or at the market open on the first day of the week.
Buy Trade Setup
When to Enter?
Wait for a downward gapping market to prompt the indicator to plot an arrow pointing up. Set a buy stop order on the high of the candle where downward gap developed. Set the stop loss below the low of the candle.
When to Exit?
Set the take profit target at the level where the gap would be closed.
Sell Trade Setup
When to Enter?
Wait for an upward gapping market to prompt the indicator to plot an arrow pointing down. Set a sell stop order on the low of the candle where upward gap developed. Set the stop loss above the high of the candle.
When to Exit?
Set the take profit target at the level where the gap would be closed.
Conclusion
It is a widely accepted assumption among traders that market gaps do tend to be closed more often than not. However, there are also many scenarios wherein price would continue in the direction of the gap. This opposing scenario is what some traders call “Gap and Go”.
This indicator is a very useful trade signal indicator for trading reversals after a gapping market.
MT4 Indicators – Download Instructions
i-Gap Indicator for MT4 is a Metatrader 4 (MT4) indicator and the essence of this technical indicator is to transform the accumulated history data.
i-Gap Indicator for MT4 provides for an opportunity to detect various peculiarities and patterns in price dynamics which are invisible to the naked eye.
Based on this information, traders can assume further price movement and adjust their strategy accordingly.
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How to install i-Gap Indicator for MT4.mq4?
- Download i-Gap Indicator for MT4.mq4
- Copy i-Gap Indicator for MT4.mq4 to your Metatrader Directory / experts / indicators /
- Start or restart your Metatrader 4 Client
- Select Chart and Timeframe where you want to test your MT4 indicators
- Search “Custom Indicators” in your Navigator mostly left in your Metatrader 4 Client
- Right click on i-Gap Indicator for MT4.mq4
- Attach to a chart
- Modify settings or press ok
- Indicator i-Gap Indicator for MT4.mq4 is available on your Chart
How to remove i-Gap Indicator for MT4.mq4 from your Metatrader Chart?
- Select the Chart where is the Indicator running in your Metatrader 4 Client
- Right click into the Chart
- “Indicators list”
- Select the Indicator and delete
i-Gap Indicator for MT4 (Free Download)
Click here below to download:
