• A gap occurs when the opening price of a security is much higher or lower than the previous closing price, with no trading activity in between.
  • Normal gaps tend to be partial gaps, while breakaway, run-up and exhaustion gaps tend to be full gaps.
  • A full gap occurs when the opening price is completely outside the previous day’s price range.
  • Each type of gap gives certain signals for traders.
  • Because common gaps are relatively small and fairly regular events, they tend not to provide real insights.