Gap Down

In stock market terms, a gap down is a drop in the market price of a security which occurs between the closing and opening hours of the relevant exchange.

A gap down is most commonly caused by an increase in sell orders for a certain security during the closing hours of the exchange on which the security is listed.

Example: A stock closes at 2 Swiss francs per share and opens at 1.80 Swiss francs per stock the next trading day. The gap down, in this case, would be 20 centimes.

See also: Gap up

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