EM FX: Never chasing a gap, especially on low volume

Learned this the hard way with $ZAR a few years back. Saw a strong gap open after some positive data out of South Africa, and against my better judgment, I chased it. My reasoning at the time was 'it's consolidating, this is the breakout'. Fact was, it was Friday afternoon, liquidity was drying up, and that gap was largely retail driven. The smart money was already out or waiting for a better entry.

Within an hour, the move completely faded, and I ended up stopped out for a loss I shouldn't have taken. The lesson was simple: if you miss the initial move on lower-tier EM currencies, especially near weekend closes, let it go. Chasing often means you're buying someone else's exit liquidity.