Gap up or gap down trading refers to stocks opening significantly higher or lower than the previous day’s closing price. Gaps usually occur due to news or global market movement.
Traders look for continuation or reversal after the gap. Some gaps fill quickly, while others trend strongly throughout the day.
Gap trading involves high volatility, especially during market open. Risk is higher in the first few minutes.
Understanding gap behavior helps traders avoid impulsive trades during volatile openings.
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