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Gap (Price Gap) Definition

A gap is a difference between the closing price of one trading session and the opening price of the next, with no trading in between.

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What is a Gap?

Gaps often occur due to news events or data releases that happen outside regular trading hours.

Traders distinguish between different gap types, such as breakaway, runaway, and exhaustion gaps, based on where they occur in a trend.

Example of Gap

A stock closing at $50 and opening the next day at $55 after strong earnings has gapped up $5.

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