LEARN TO TRADE · Beginner · 6 min read · 3 Nov 2026 · Navion Pro Research
Why Prices Gap, and What It Means for Your Stop Loss
Most of the time, prices move in small steps. Sometimes they jump, skipping every price in between. That jump is a gap, and it can close your trade at a very different price from the one you planned. This guide explains why gaps happen and how traders allow for them.
Trading leveraged products carries a high level of risk to your capital. Losses can exceed deposits. Past performance is not an indicator of future results.
Key Points
- A gap is a jump in price from one level to another, with no trading at the prices in between.
- Gaps often happen when a market reopens after a close, or when major news hits.
- A stop loss cannot fill at a price the market skipped. It fills at the next available price, which can be worse.
- Knowing when gaps are likely, and sizing trades with them in mind, helps limit the damage.
What a gap is
Imagine walking down a staircase, one step at a time. A gap is when the next step is missing, and you land three steps lower.
On a chart, a gap shows as a jump between one price and the next, with empty space between them. No trades happened at the prices in that space, so no order could fill there.
Why gaps happen
- The market was closed. News keeps arriving when trading stops. When the market reopens, the price can open well away from where it closed. Gold, for example, closes from Friday 17:00 to Sunday 18:00 US Eastern time, and has a one hour break each weekday.
- Major news. Interest rate decisions, inflation data and surprise events can move a price so fast that it skips levels, even while the market is open.
- Company results. Many companies report outside stock exchange hours, so a share can open far from its last price.
- Quiet trading. When few people are trading, a single large order can move the price further than usual.
A weekend gap, step by step
This example is for illustration only. The prices are not real quotes.
- On Friday, a trader buys 0.01 lot of gold, which is 1 ounce, at $3,900. They set a stop loss at $3,880, a planned loss of $20.
- The market closes for the weekend with gold at $3,895.
- Over the weekend, unexpected news breaks.
- On Sunday evening, US time, gold reopens at $3,860. It has skipped straight past the stop loss.
- The stop loss fills at the first available price, about $3,860. The loss is about $40, double what was planned.
A stop loss tells the platform when to close. It cannot choose a price the market never traded at.
Which markets gap most
| Market | When gaps are most common |
|---|---|
| Global stocks | Between trading days, and after company results outside market hours |
| Global indices | When their stock markets open each day, after overnight news |
| Forex | When trading resumes after the weekend |
| Gold and other commodities | After the weekend and daily breaks, and around major news |
| Crypto | The coins trade every day, but CFD trading hours depend on the platform, so gaps can appear when trading resumes |
Any market can gap around major news.
How traders allow for gaps
- Know the trading hours. Check when your market closes and reopens, and whether you will hold a position through a break.
- Check the calendar. Know when major data, central bank decisions or company results are due.
- Size for the worst case. Ask what the loss would be if the price jumped well past your stop loss.
- Think twice about holding through a close. Some traders reduce or close positions before weekends or big events.
- Keep margin in reserve. A gap can use up margin quickly, and free margin gives you room to absorb it.
Risk disclosure: Trading involves significant risk of loss and is not suitable for all investors. Past performance is not indicative of future results. This brief is for information and education only. It is not investment advice, a recommendation or an instruction to buy or sell anything. The likely market reactions described here are our assessments of what could happen, not predictions, and markets can and often do move differently. Figures and forecasts come from third party sources and may change. Make your own decisions, and consider independent advice if you are unsure.
