Gap in trading. What is it and how to trade?
To put it simply, a gap is an interval in price on a chart. In English “gap” literally means “an unfilled space” or “interval”.
This is how ↑ the gap looks like on the AAPL chart (actually, there are many more gaps, we have highlighted only the most noticeable one for demonstration purposes).
In this article about gaps you will find out:
- What a gap is.
- Why gaps occur.
- Gap analysis on a chart.
- Specific features of gaps in different markets.
- What a dividend gap is.
- Three gap trading strategies.
- Disadvantages of gap trading.
- How to improve gap trading with professional tools.
The article is written in simple words so even beginners will be able to understand it, but it also provides useful information for experienced traders.