Trading Academy Navigation

  • Down Gap

Definition:
A Down Gap is an immediate price change from a high price to a low price that is reflected in a chart as an area where no trades took place in between the close of the previous bar and the open of the subsequent bar.

Background: Gaps can be created by a variety of factors including but not limited to specialist behavior, earnings announcements and analyst ratings.
Down gaps often fill due to profit taking from short sellers who have open positions before the gap and exit their short trade by buying as price moves down.

Practical Use: For traders, Gaps represent both opportunity and risk. Technical analysts should strive to understand Gap strategies in which to profit from as well as reduce risk in trades.

Get 6 (downloadable) trading tutorials emailed to you right now--free.


Real-life Chart Examples

About

Support

Social Media

© Copyright © 2007–2025 Grok Trade, LLC | All Rights Reserved 

Disclaimer: Educational Use Only
The content provided by Grok Trade, LLC—including courses, videos, training, and market analysis—is for educational purposes only and should not be considered financial, investment, tax, or legal advice. Grok Trade and its contributors are not registered investment advisers, broker-dealers, or financial planners. Trading involves risk of loss, including the potential for total loss of capital. Past performance does not guarantee future results, and hypothetical or simulated outcomes have limitations. Examples are for illustration only. You are solely responsible for your trading and investment decisions. Grok Trade makes no guarantees regarding accuracy or completeness and disclaims liability for any losses incurred from reliance on our content. Always consult a licensed financial professional before making financial decisions. Use of this site means you accept these terms.