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Frequently Asked Questions

What is gapping in the stock market?

If yes, you probably didn’t know that this market phenomenon has its name – it’s called gapping. In this article, we’ll cover why a stock price gaps, what types of gaps exist and what does “gap up” mean in stock trading. Why Does the Stock Market Gap? Gaps occur when the opening price of a stock differs from its closing price.

Why do traders use gaps?

Some traders use gaps for analytical insight. For example, if a gap occurs relatively early in a trend, then it is probably a breakaway gap or a runaway gap, which lets the trader know the price likely has further to run. Other traders use gaps for trading purposes.

What is a gap in a trading chart?

In simple terms, traders identify gaps between opening and closing prices on a trading chart where there has been volatile action, and can use this to devise an appropriate trading strategy. They will then need to calculate potential entry and exit points for their trades.