Market Gapping

The stock market term “market gapping” denotes changes in the price of a security which occur between the close and open of the exchange on which the security is listed.

Prices may increase (gap up) if purchase orders for a security increase during the closing hours of the exchange on which the security is listed – due to a relevant event or news report which occurs after an exchange closes, for example.

Prices may also decrease (gap down) if purchase orders decrease during the closing hours of the exchange on which the security is listed – due to a post-exchange event or release of information, for example.

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