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Registered User
Joined: 11/14/2006
Posts: 6
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When a stock "gaps" at the opening, does that mean the stock opens higher or lower than the entire previous day's trading range or just higher or lower than the previous day's close?
Many thanks.
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Worden Trainer
Joined: 10/7/2004
Posts: 65,138
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You may think it is a simple question, but it is one I ask almost every time a customer makes a request for this. I do so because there is absolutely no agreement as to the answer.
-Bruce
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Registered User
Joined: 7/30/2007
Posts: 1,072
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QUOTE (duketrade) When a stock "gaps" at the opening, does that mean the stock opens higher or lower than the entire previous day's trading range or just higher or lower than the previous day's close?
I guess the answer to both is "Yes".
I don't trade gaps, but here's the lingo one of the other vendors (rhymes with "MockCharts") uses in its documentation to address the different types of gaps you mention above...
For trading purposes, we define four basic types of gaps as follows:
- A Full Gap Up occurs when the opening price is greater than yesterday's high price.
- A Full Gap Down occurs when the opening price is less than yesterday's low.
- A Partial Gap Up occurs when today's opening price is higher than yesterday's close, but not higher than yesterday's high.
- A Partial Gap Down occurs when the opening price is below yesterday's close, but not below yesterday's low.
Hope this helps.
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Registered User
Joined: 11/14/2006
Posts: 6
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Thanks both and it does help.
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Administration
Joined: 9/30/2004
Posts: 9,187
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I've always understood it as a "full gap". Stocks rarely open at the exact price they closed at the day before so essentially every stock "gaps", partially, every market day.
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Registered User
Joined: 1/28/2005
Posts: 6,049
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Some rate 10 Gap Zones:
Yesterday closed down:
D-H Above yesterdays high
D-HO Between yesterdays high and open
D-OC Between yesterdays open and close
D-CL Between yesterdays close and low
D-L Below yesterdays low
Yesterday closed up:
U-H Above yesterdays high
U-HC Between yesterdays high and close
U-CO Between yesterdays close and open
U-OL Between yesterdays open and low
U-L Below yesterdays low
Thanks
diceman
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