A jump in price from one level to another with no trading in between, for example after news. A gap can skip past a stop.
How traders use it: Gap risk is considered when sizing positions held through news or market closures.
Common mistake: Confusing a price gap with a fair value gap, which is a wick-to-wick imbalance with trading in between.
Related: Slippage · Fair value gap (FVG) / imbalance
Used in: Stops, slippage, and gaps: why real losses run larger
See this term in the full glossary · All terms
Concepts only. Education only, not financial advice. No pattern on this site has a published win rate.