What Is a Gap on a Chart? Does a Price Gap Always Get Filled?
In the morning a stock opened 5% above yesterday's close, leaving a “hole” on the chart. That's a gap. Here's where gaps come from and why they're dangerous for open trades.
What it is
A gap is when a new candle opens noticeably above or below the previous close, with no trades in between. Gaps are most common in the stock market: the exchange closed for the night or the weekend, news or an earnings report came out, and in the morning trading starts right at a new price.
Crypto trades around the clock, so there are almost no gaps on spot charts. You can see them, for example, on CME bitcoin futures, which close for the weekend.
Types of gaps
| Type | Where it appears | What it means |
|---|---|---|
| Common | Inside a range | Often fills quickly |
| Breakaway gap | On a breakout from a range | Start of a strong move |
| Runaway gap | In the middle of a trend | The trend is accelerating |
| Exhaustion gap | At the end of a long move | Possible reversal |
Is it true that a gap always fills?
No. Many gaps fill over time, but breakaway gaps after major news may stay unfilled for years.
Why a gap is dangerous
If the price opens below your stop-loss, the stop will fill at the first available price, which is worse than planned. That's no reason to give up stops: without one, the loss would be bigger. More on protecting a trade in the article take-profit and stop-loss, and on candles in the lesson candlesticks and chart patterns.
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- A gap is a jump between the close and the open.
- A gap doesn't have to fill, especially after major news.
- A stop-loss may fill worse on a gap, but no stop is always worse.
Frequently Asked Questions
Why are there almost no gaps in crypto?
Because the crypto market runs 24/7 with no weekends. Gaps do occur on exchange-traded futures that close for the weekend, and on small coins with infrequent trades.
What does “filling the gap” mean?
The price returns to the level where the gap started and “fills” the empty space on the chart.
How do I protect myself from a gap on earnings?
Reduce your position before the report or don't hold it through the event. Size your position so that even a stop filling worse than planned doesn't hit your account hard.
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