Glossary

Gap

Movement in the price of a stock that does not overlap with the previous trading range. Gaps occur as a result of changes in the valuation of the stock.

Gaps occur in particular when trading in a stock is interrupted, in which case the valuation of the stock can change very rapidly. Longer interruptions can result in significant jumps in price, because this gives all market participants an opportunity to process the most recent information and reassess the value of the stock. A gap can also refer to the difference in price between the opening price and the trading range of the previous day (opening gap).

Technical analysts use gaps as indicators of trends. There are several different types of gaps, including common gap, breakout gap, runaway gap and exhaustion gap.

Also see:  Breakout gap, Common gap, Exhaustion gap, Runaway gap, Technical analysis
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