Module 3 — Price behaviour
Gaps up and gaps down
5 minute read
In plain English
A gap is when a stock opens at a materially different price than it closed, usually because of overnight news.
Why it matters
Gaps change the whole risk picture: your intended entry may no longer exist.
Example
A close at $2.80 followed by an open at $3.60 means anyone who planned a $2.85 entry has to start again.
Try this
Track five gapping stocks for a week and record where they closed relative to their open.
Common mistake
Chasing the open price of a large gap without a plan.
What this does not mean
A gap does not have to 'fill'. That is a tendency, not a rule.
Educational content only. Not financial advice.