Market Gap
A market gap is a jump between one traded price and the next, leaving no prices quoted in between.
Full explanation
A market gap occurs when an instrument opens or resumes trading at a price noticeably above or below its previous traded price. The untraded area between those prices is called the gap. In forex, gaps are most commonly seen when the market reopens after the weekend, because major news or changing sentiment may occur while most currency trading is closed.
Gaps can also appear around major economic releases or unexpected events, although the continuously traded forex market usually reduces their size during weekday sessions. A gap may be upward (a gap up) or downward (a gap down).
Example: EUR/USD closes near 1.0850 late on Friday. After significant news over the weekend, it reopens on Sunday evening near 1.0800, creating a downward gap between the prior close and the new opening price.
Why traders watch it
A gap can indicate that prices adjusted quickly to new information and may affect the price at which orders are filled when trading resumes.
Trading considerations
- Weekend gaps are more common in forex than gaps during active weekday trading.
- A stop-loss order may be filled at a different price from its set level if price jumps across it; this is called slippage.
- Not every gap is later revisited or ‘filled’ by price.
Educational guidance only — never a trading signal or recommendation.
Related indicators
Slippage
Slippage is the difference between the expected price of an order and the price at which it is executed.
Volatility
Volatility describes how much price moves over a given period. High volatility means larger, faster swings and wider ranges; low volatility means quiet, compressed trading. Volatility is not direction — a market can be highly volatile while going nowhere. It rises around major news, session opens and central-bank decisions, and it decides how far stops and targets need to sit.
Liquidity
Liquidity describes how easily you can buy or sell without moving the price. Deep liquidity means tight spreads, reliable fills and orderly movement. Thin liquidity means wider spreads, slippage and sudden jumps. Liquidity varies through the day, peaking when London and New York overlap and thinning during the late Asian session, holidays and the minutes around major releases.