What is a Price Gap Please?

Ese11

Trader
Aug 12, 2015
32
0
12
Anyone knows of a price gap and why they appear on a chart? Are they something I should watch out for as a new trader? How would they risk my trades? Thank you
 

Enivid

Administrator
Staff member
Nov 30, 2008
18,797
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Odesa
www.earnforex.com
Price gap appears when there was no liquidity for the price levels between the first and second price. Usually, it happens when there is significant market volatility (news releases) or when there is very low liquidity (night-time for a given session). Weekly price gaps happen because of a changed market sentiment due to some news released on Saturday or Sunday.
 

sharcade

Trader
Aug 18, 2015
12
0
7
Price Gap states if price of a stock jumps or falls in a direction away from its last price range, such as a stock with a trading range of $10-$12 that closes at $12 and climbs to $14 the next day.
Hope I was helpful and yes being a trader you have to look over the daily changes.
Thanks.
 

assaad747

Trader
Aug 30, 2015
6
0
7
The price gap is a jump between two periods of time
They are considered as support and resistance lines
There are three types that I use when I trade
1/ breakaway gap: it occurs in the first of a trend line, it is the most profitable gap that you must trade, we expect that the price will reverse its direction aggressively.
2/ runaway gaps: they occur in the middle of a trend line, they could be supported and resistance lines.
3/exhaustion gaps: they occur at the end of a trend line, they are not tradable and not profitable and you must avoid them.
Hope I help
 

jellyeb

Active Trader
Jun 10, 2015
248
11
29
They are considered as support and resistance lines

Dude that's wrong price gaps can't be considered as S/R levels you need PRICE to define them.
Its rare when I get gaps with my broker probably because I trade on well-liquid pairs so I don't use how it's possible to benefit from gaps.
 

Ary Barroso

Active Trader
Jul 9, 2017
908
71
39
35
I see, you already got your answer! By the way, usually, I am not interested on gap trading; even usually I avoid 1st session of the Monday.