what causes gaps in stocks?

Discussion in 'Stocks' started by countercountertrend, Jul 5, 2019.

  1. Gaps just reflect differences in valuation after more time than usual has passed between the former bar and the current one. You can also basically get a huge gap intraday between one trade and another if something triggered valuation to instantly change. If you will lose too much on an overnight gap then you are too highly leveraged and are at risk even intraday IMO.

    Remember price is simply the market's current valuation of the instrument. This will change even without afterhours/premarket trading or whatever.
    Last edited: Jul 5, 2019
    #11     Jul 5, 2019
    Metamega likes this.
  2. So, what determines the difference between the closing price and the opening price the next day? Is it related to after hours trading and early trading? Is it based on the volume, price, bid and ask? Or is there an algorithm that determines the opening price based on the orders to buy and sell? The orders lined up in the Servers that will be filled once the bell rings?

    Would it be safe to safe that the opening prices are determined by computers and not by traders on the floor?
    #12     Jul 5, 2019
  3. Overnight


    I would like to think so.
    #13     Jul 5, 2019
  4. misti


    This is so true...!!!
    #14     Jul 6, 2019
  5. Turveyd


    Nah deals being done by humans.
    #15     Jul 6, 2019
  6. themickey


    I understand
    #16     Jul 6, 2019
  7. vincentnyc


    Earning and news catalyst. The highest probability of predicting a gap up is to buy before earning and chart analysis.
    #17     Jul 6, 2019
  8. When the prices go too high or too low, that is the time when the markets can have a gap. There is no trading activity in this time period. The possible causes for this gap can be:-
    • public announcement of company‚Äôs profits
    • some positive news released by the company.
    • Changing views of the trading analyst
    • buying and selling pressures among traders.
    #18     Jul 18, 2019
  9. d08


    Gaps happen when information dissemination is faster than the quoting system. It doesn't only happen when the market is closed. It sometimes happens in liquid instruments during regular market hours as well when there's a big news announcement.
    #19     Jul 18, 2019
    DallasCowboysFan likes this.
  10. d08


    #20     Jul 18, 2019