A price gap occurs when there is a sudden jump in price between two consecutive trading periods, resulting in a space (or "gap") on the price chart. This means the opening price of a new candlestick is significantly different from the previous candle's closing price.
When Do Price Gaps Happen?
Price gaps can occur due to:
🔹Market Openings – Over the weekend or after holidays when trading resumes.
🔹News Releases – Major economic reports, geopolitical events, or unexpected market developments.
🔹High Volatility – Sudden shifts in supply and demand that move the market rapidly.
Since gaps result from market dynamics, they are beyond the broker’s control and are considered an inherent market risk.
How Can Price Gaps Affect Trading?
🔹Favorable Gaps – If the market moves in your favor, your trade could open at a better price than expected.
🔹Unfavorable Gaps – If the price moves against your trade, it could lead to increased losses or stop-out scenarios.
At Eurotrader, we provide CFD trading, allowing traders to profit from both rising and falling markets, depending on their strategy.
If you have any questions, feel free to contact us!
