In this post we discuss gapless indicators, specifically the the Gapless EMA. You may use these indicators for instruments and session templates that have a price gap between yesterday’s close and the current open. To learn more about the Gapless EMA, check out this video, or continue reading below:
Overnight Gaps:
Overnight gaps occur with instruments that do not have an overnight trading session. For example, the FDAX benchmark index for the Germany equity market is closed from 10:00 PM until 8:00 AM local time. Therefore, significant fluctuations in Asian markets may create price gaps that reflect the overnight price action.
Likewise, gaps will appear if you use a session template that only displays the regular trading session. The CME US Index Futures RTH template will only show price data from 8:30 AM to 3:15 PM Central Time, so any significant price moves that occurred overnight, will create a price gap.
This represents a challenge for moving averages and oscillators because the gap is factored in as part of the lookback period. Therefore, at the start of the new session, you’ll have to wait until the gap is eliminated from the lookback period before using it. Our Gapless indicators address this issue and below we’ll look specifically at the Gapless EMA.
Standard EMA vs. Gapless EMA:
Below is a comparison between the regular Exponential Moving Average (EMA) and the Gapless EMA. Instead of waiting for the lookback period to eliminate the gap from its calculation, you may use the Gapless EMA immediately because it automatically adjusts for the overnight gap.
Gapless indicators measure the difference between the prior day close and yesterday’s last indicator plot, transferring it to the current open. Furthermore, the indicator also comes with an option to reset the calculation to start at the current open.
Other Library Indicators
Other than the Gapless EMA, the Gapless Indicators category also features the following:
- MACD Gapless Indicator
- SMA Gapless Indicator
- TEMA Gapless Indicator
- WMA Gapless Indicator
- ZLEMA Gapless Indicator
These indicators are available for NinjaTrader 8. To review, please follow the below link to our NinjaTrader Indicators Library:
