What You Need To Know About Gaps by Joe Luisi and Jayanthi Gopalakrishnan
Have you ever wondered what gaps are and why they occur? Here are the various types, examples - and an answer.
Ever had an open position at the close one day, only to find that a significant change in price had occurred when the market opened the following trading day? These changes in price are referred to as gaps and are the result of some action that took place between the
close and the next day’s open.
With the advent of 24-hour trading and extended-hours trading, it is not unusual to come across significant changes in prices at the open of one day from the previous day’s close. All markets trade during specified times. Each market has its own opening and closing times, called market hours or pit session. Some markets are open for eight hours a day,while others are open for a shorter period. For example, the foreign currencies that trade at the IMM in Chicago open at 7:20 am Central Time and close at 2:00 pm, while the live cattle market opens at 9:05 am Central Time and closes at 1:00 pm.