Gap

In practice

A stock closes Friday at $100 and opens Monday at $105 — a $5 gap up. In forex, the weekend equivalent often shows as a fast wick on Sunday's open rather than a clean gap, because retail brokers reopen quoting before liquidity is full.

Why it matters for traders

Gaps represent a sudden shift in sentiment that happened with no trading in between, and they often get filled as price returns to the gap zone — a tendency traders plan around. They also expose overnight holders to gap risk, where the open is far from your stop, which is why many traders close positions before such events.

Common pitfall

Traders expect every gap to 'fill' and trade that assumption with oversized positions, but not all gaps fill quickly — some mark the start of a sustained breakout that never returns. The pitfall is treating gap-fill as a certainty rather than a tendency. Manage gap trades with tight risk and a level where the thesis is wrong. Also never hold into a gap event expecting your stop to protect you — the open can gap straight past it.

Lessons that use this term

• Weekend gap risk

  Why a stop loss does not protect you between Friday's close and Sunday's open.

• Fair value gaps (FVG)

  The three-candle imbalance price leaves behind when it moves too fast — and why it usually gets filled.

• Fair value gap (FVG)

  The three-candle imbalance pattern, how a bullish and bearish FVG form, why price often returns to fill the gap, and how traders use it as confirmation rather than a stand-alone signal.

Related terms