Gap
Gap
Understanding the Gap in Trading
A Gap in trading refers to a sharp break or "gap" in the price chart of a security. When you look at a stock chart, you will normally see a fluid progression of prices. However, every once in a while, you may notice a point where there is a significant price increase or decrease from one period to the next without any trading occurring in between. That sudden leap is what traders call a Gap.
When Gaps Occur
Gaps mostly occur overnight when the market is closed or due to fundamental news releases, often following significant occurrences such as earnings announcements, regulatory news, or major economic events. Due to this, the security opens at a higher or lower price than it had closed on the previous trading day, forming a 'Gap'.
Types of Gaps
Generally, traders recognise four types of Gaps: Breakaway, Continuation (or Runaway), Exhaustion, and Common. Each one of these Gaps sends different signals and requires distinct strategies to trade effectively.
Trading with Gaps
Traders often see Gaps as potential trading opportunities. Some traders use the 'Gap filling' strategy. They believe that price often comes back to fill the Gap, meaning it will return to its previous closing level. However, not all gaps get filled, and it's crucial to do your research and evaluate the risk before entering a trade.
The Importance of Gaps
Gaps are invaluable for traders as they can highlight strong levels of support and resistance. Traders often keep a close watch on these Gaps to help predict future price movements, providing essential information for short-term trading strategies.
Conclusion: Decoding Gaps
Understanding Gaps helps traders to capitalise on significant price shifts or changes in market sentiment. They offer both risks and opportunities. With due diligence, experience, and the right strategy, traders can leverage Gaps to optimise their returns.
Learn from other traders and their investment activities or publish your own content and become a Lead Trader yourself
Blog Posts with the term: Gap
So, you're diving into the world of crypto, huh? Well, buckle up because crafting a secure passphrase is your first line of defense. It's not just about throwing random words together; there's a bit of an art to it. Think...
In the world of cryptocurrency, security is paramount. As digital assets grow in popularity, so do the risks associated with storing them. This article will guide you through the importance of securing your crypto assets with offline wallets. Whether you're...
Gemini, a cryptocurrency exchange founded by the Winklevoss twins in 2014, has rapidly become a go-to platform for digital asset traders worldwide. With a strong emphasis on security and regulatory compliance, Gemini caters to both novice and experienced traders by...
As the digital currency landscape continues to expand, traders are in search of platforms that offer convenience, versatility, and security. Changelly emerges as a prominent solution, offering a seamless exchange service for crypto enthusiasts around the globe. This introduction seeks...
Crypto wallets are essential tools for anyone dealing with cryptocurrencies. They allow you to store, send, and receive digital assets securely. However, not all crypto wallets offer the feature to transfer funds directly to a bank account. Understanding how these...
Tap into the power of technical analysis with Bollinger Bands Trading. For beginners and seasoned traders alike, this strategy is an essential tool in understanding market volatility, and more importantly, in capturing profits. Created by John Bollinger in the ‘80s,...
Starting your journey into the world of cryptocurrency can be both exciting and daunting. With so many exchanges to choose from, it's crucial to select one that aligns with your trading goals and comfort level. Bitstamp stands out as a...
Cryptohopper is an automated crypto trading platform that enables users to engage in trading strategies on autopilot, facilitating 24/7 trading activities without the need to constantly monitor the markets. This sophisticated tool is designed to help both novice and experienced...
Paybis is a digital currency exchange platform that allows users to buy, sell, and exchange various cryptocurrencies easily and securely. Established to bridge the gap between traditional financial systems and the new era of digital currency, Paybis has positioned itself...
With more people stepping into the crypto trading space, there arises the need for reliable and functional platforms to facilitate these transactions. The year 2023 has seen further growth and expansion in the crypto industry and numerous trading platforms vying...
The world of financial trading offers a plethora of strategies designed to help traders make informed decisions. One such technique, frequently used by hedge funds and investment gurus, is Pairs Trading. In the simplest terms, Pairs Trading is a strategy...
As technology continues to evolve, the world of trading is not left out. It is experiencing massive changes, thanks to the implementation of Artificial Intelligence. AI in Trading has become a game-changer, profoundly affecting how market participants buy and sell...
Before plunging into the meat of this discussion, it's important to get a grasp on what "liquidity" means in the context of the cryptocurrency space. Crypto liquidity can be defined as the ability of a particular cryptocurrency to be quickly...
As we delve deeper into the digital age, an evolution in the finance industry is becoming increasingly clear. Traditional forms of investment are being overhauled by digital alternatives, bringing newfound accessibility and transparency to the financial world. One such digital...
OKX stands as a beacon in the dynamic world of digital assets, offering a powerful trading platform for both beginners and seasoned traders alike. This comprehensive exchange provides an extensive array of tools designed to give users an edge in...