📚 Stock Market Glossary
Clear, beginner-friendly explanations, real-world analogies, and visual formulas for key stock market terminology.
Price Gap & Gap Fill
Trading & Market💡 Key Takeaway: A break between prices on a chart where no trading takes place, caused by overnight news or earnings surprises.
Skipping Stairs Analogy: Jumping over two steps at once, leaving an empty air space between stairs on the chart!
😎 10-Second Show-off Pro Tip for Friends!
😎 Show-off Tip: Say, 'Don't rush to buy a massive Gap Up at the opening bell! Most gaps get filled as profit-takers exit—wait for the Gap Fill retest before taking a position.'
📖 Beginner-Friendly Explanation
STEP 1
Core Concept & Meaning
A Price Gap represents a discontinuous break in a chart where no trading occurred between periods, caused by overnight events.
STEP 2
Why It Matters & Mechanism
- Gap Up: Shockingly positive news or earnings beats drive the opening price significantly above the previous day's high.
- Gap Down: Negative news or earnings misses push the opening price below the previous day's low.
STEP 3
Practical Investment Tips & Pitfalls
- Gap Fill Rule: Technical analysis observes that market prices frequently retest and 'fill' gaps later on. Because no transactions occurred inside the gap space, price tends to pull back into the gap zone to establish true equilibrium.
📊 Gap Up Mechanism and Gap Fill
Gap rising opening price = Starts with a rise of more than +5% compared to the previous day's closing price ➔ Observe downward adjustment to fill the gap in the future
▶ Breakout Gap: The gap that breaks through the selling range with large trading volume is not filled and continues to soar
▶ General Gap: Sooner or later, the stock price falls to the point where the gap occurs and completely fills the gap (Gap Fill)
⚖️ Key Comparison at a Glance
| Category | Gap Up | Gap Down | Gap Fill |
|---|---|---|---|
| Cause | Earnings surprise, announcement of good news, good performance | Earnings shock, announcement of bad news, paid-in capital increase | Stock price readjustment to fill in the trading gap |
| Chart Features | Opening price formed well above the previous day's high price | Opening price formed well below the previous day's low price | Stock price re-enters gap creation price range |
| Trading response | Refrain from chasing after the market (waiting to fill the gap) | Immediate risk management and wait-and-see | Buy after confirming a bounce in the support line to fill the gap |
📌 Practical Market & Real-World Example
Though the Big Tech stock opened 8% higher on earnings, profit-taking filled the gap three days later before resuming its primary rally.