Price gap
Also called: gap up, gap down, gap
A jump between one trade and the next with no trades in between, often between one day's close and the next day's open.
Gaps usually happen when news arrives while the market is closed, so the next session opens at a very different price. No trades occur at the prices in between.
Gaps are why stop-loss orders cannot guarantee an exit price: the price can move straight past the trigger.
Example
A share that closes at ₹480 and opens at ₹420 after bad results has gapped down by ₹60.
Learn more in these lessons
- Stop-loss and stop-limit ordersHow does a stop-loss order work?
- Open, high, low and closeWhat do the open, high, low and close of a share's price mean?
- Price gapsWhy do price gaps happen, and do they always get filled?
- Average true range (ATR)What is the average true range, and how is it used?
Related terms
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