In the world of Forex and futures trading, the ICT New Week Opening Gap (NWOG) has gained significant attention among smart money traders. Anyone who understands and, most importantly, masters this concept can have a considerable edge in trading.
In this article, we will discuss in detail what the ICT NWOG actually is, why it is formed, how to identify and trade it, and common errors made with the NWOG that all traders should learn to avoid.
What Is the ICT New Week Opening Gap (NWOG)?
The New Week Opening Gap (NWOG) refers to the gap price established between the close on Friday and the open on Monday in the Forex markets. ICT (Inner Circle Trader) concepts emphasize this gap as an important liquidity pool where institutions may target prices later in the week.
In regular instances, the market revisits this gap after “balancing out” the inefficiency caused by the weekend when there is no active trading. You can capitalize on this behavior by planning entries based on gap fills.
Why the New Week Opening Gap Forms: Institutional Logic Behind It
The NWOG forms because of institutional order flow. Large financial institutions, banks, and hedge funds are in charge of liquidity and price imbalances. Since the exchange during the weekend is closed, the price gapping is caused by the pending institutional orders or any news events.
The ICT model teaches that institutions create and later mitigate imbalances. The NWOG represents an unfilled area of liquidity that institutions will often push prices back into early in the trading week.
This means the gap is not random, it’s based on smart money movements and liquidity engineering. Understanding these institutional trading strategies helps you align yourself with professional market participants.
How to Identify a Valid New Week Opening Gap on the Chart
Identifying a valid NWOG requires attention to specific criteria:
Check Friday’s closing price (typically New York close).
Check Monday’s opening price at the start of the new trading week.
If there’s a visible difference, mark the gap zone between Friday’s close and Monday’s open.
Use a reliable broker’s charting platform to ensure accurate session times (like NY close charts). Look for gaps that are clear and measurable, not tiny gaps that can be considered market noise.
Understanding Consequent Encroachment of NWOG
A crucial ICT concept tied to NWOG is Consequent Encroachment. This happens when the market trades to the gap range middle.
For example:
The gap covers the zone from 1.2000 (the closing price on Friday) to 1.2020 (the opening price on Monday), which means the midpoint is fixed at 1.2010.
If price trades into or closes at this same midpoint (1.2010), it indicates that the ICT gap trading and price action confirmation. You use Consequent Encroachment as a confirmation tool for higher probability trades when engaging with the NWOG.
How to Trade the ICT NWOG: Entry, Stop Loss, and Take Profit Setup
Successful NWOG trading requires precise execution:
Entry Strategies:
- Gap Fill Strategy: Enter when price retraces to fill the gap, using the completed fill as confirmation.
- Break of Structure: Enter when price breaks the first significant structure after the gap forms.
- Order Block Entry: Wait for price to form an order block near the gap and enter when price revisits this level.
Stop Loss Placement:
- Place stops beyond the opposite side of the gap to protect against false breakouts.
- For more conservative management, use the nearest swing high/low before the gap.
- Size positions appropriately to accommodate the potentially wider stops required for gap trading.
Take Profit Targets:
- First target: The nearest significant support/resistance level.
- Second target: The daily range extension from the gap open.
- Final target: The next major market structure level in the direction of the trade.
Tips to Avoid Fake NWOGs and Common Mistakes Traders Make
Enhance your success rate by avoiding these common mistakes:
- Avoid fake trading setups: Small gaps often get ignored by the market.
- Confirm with Other ICT Concepts: Use tools like order blocks, FVGs (Fair Value Gaps), and SMT divergence for confluence.
- Don’t Rush the Entry: Let price show intent before entering.
- Beware of Low Volume Mondays: Sometimes Monday can have low volume, making gap fills unreliable.
- Use Correct Broker Timing: Different brokers have different market close/open times. Always verify.
Conclusion
The ICT New Week Opening Gap offers traders a structured, institutional-based trading opportunity every week. By understanding why the NWOG forms, how to identify it, and how to trade it safely, you can add a powerful edge to your Forex trading arsenal.
“However, remember that discipline, confirmation, and risk management remain key even with a strong concept like NWOG. Incorporating this strategy with solid ICT principles will undoubtedly enhance your trading success.”
FAQs
What time frame should I use to identify NWOG?
Use the 1-hour or 4-hour charts around the New York Friday close and Monday open.
Can NWOGs happen in commodities or indices?
While gaps happen across markets, ICT’s NWOG specifically focuses on Forex, but concepts can be adapted.
Is trading the NWOG risky?
Like any strategy, NWOG trading carries risk. Use confirmation setups and strict risk management.
How often does the market fill the NWOG?
While not 100%, the market revisits the NWOG a majority within the first two trading days.
What indicators help in NWOG trading?
ICT recommends pure price action, but tools like FVG indicators or session indicators can assist in precision.
