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The Bitcoin CME gap trading strategy is a popular approach among cryptocurrency traders that focuses on the price gaps that occur between the closing price of CME Bitcoin futures on Friday and their reopening price on Monday.
CME Group\“s Bitcoin futures market operates only during traditional trading hours from Monday to Friday, while the spot Bitcoin market trades 24/7. This creates situations where the price of Bitcoin moves significantly over the weekend, resulting in a gap between Friday\“s closing price and Monday\“s opening price.
The core principle of this strategy involves identifying these gaps and trading based on the statistical tendency for prices to eventually fill these gaps. When a gap appears, traders typically take positions expecting the price to move back to fill the gap area.
There are two main types of gaps in this strategy: upside gaps and downside gaps. An upside gap occurs when Monday\“s opening price is higher than Friday\“s closing price, while a downside gap happens when Monday\“s opening price is lower than Friday\“s closing price.
Successful implementation of the CME gap strategy requires careful risk management, as not all gaps get filled immediately. Some gaps may take weeks or even months to fill, while others might not fill at all if market conditions change significantly.
Traders often combine this strategy with other technical analysis tools such as support and resistance levels, volume analysis, and trend indicators to improve their timing and success rate. |
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