trading gap(redirected from Trading Gaps)
In technical analysis, a break on a chart representing a sudden and large price movement accompanied by high trading volume. Generally speaking, charts do not show trading gaps because price movements, even when large, occur smoothly enough to not require a break in the chart. Trading gaps may occur, for example, when the price of a security suddenly doubles or halves. As with many charting terms, it may be bullish or bearish; a sudden movement upward is a bullish trading gap, while a sudden movement downward is bearish. It may occur when there is a significant break between the bid and the ask, or when trading temporarily stops in anticipation of a major news announcement by the company.
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A period of time during which a security is not traded because of a wide gap between the bid and ask or because of an official halt triggered by a technical factor, such as the expected release of a major news story relating to the security.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.