Guide · Basics
What Is a Gap Up or Gap Down in Trading?
Prices don't always move smoothly from one candle to the next. Here's what causes a gap, and why the first few minutes after one open so much attention.
A gap happens when an asset's price opens noticeably above (gap up) or below (gap down) where it closed in the previous session, with no trading in between at the prices skipped over. It's most common in stocks, which stop trading overnight and over weekends, unlike crypto markets that trade continuously and rarely gap in the same dramatic way.
Gaps are typically caused by news that breaks while the market is closed — earnings released after the bell, a surprise announcement, or a macro headline overnight — which gets priced in all at once the moment trading reopens, rather than gradually across a session the way information normally gets absorbed into price.
What happens right after the open is what traders watch closely: a gap can 'fill,' meaning price retraces back toward the prior close as the initial reaction fades, or it can 'run,' meaning the new information keeps pushing price further in the same direction. Distinguishing which is happening in real time is genuinely difficult, which is exactly why the first minutes after a gap carry outsized trading volume and volatility.
Gaps are a clean, visible example of a price reacting to new information all at once rather than gradually — a pattern worth studying on Trade2Spike's live charts, where Fast Binary's short expiries let you practice reading that first reaction without real capital on the line.