Definition. The difference between one session's closing price and the next session's opening price, when the market opens outside the previous day's range or clearly away from it.
How it works
Index futures trade almost around the clock, so a gap usually refers to the regular session: a 9:30 AM New York open far from the previous regular session's close.
Example
After overnight news, the market opens the regular session above the previous day's high. The key question: will the market accept the new prices or return to the previous range?
What to watch out for
The popular saying that “gaps always fill” isn't a rule. Gaps in the direction of strong initiative can stay open for a long time.
You'll find the full explanation with graphics, examples and exercises in the 📖 Order flow encyclopedia space, and its use in the live market in the 🔴 Live Room. Both are available to Club members (in Polish).
