A price gap is a jump on the chart where the next trade prints meaningfully away from the prior close, leaving an empty stretch with little or no trading in between. Beginners meet gaps most often around weekends, holidays and big overnight headlines, when cash markets are shut and news keeps moving. This piece is literacy about how gaps form — not a playbook for trading them.
Samuel & Co Trading’s assessment is that naming the gap type and the session that created it beats treating every skip as a signal.
What a gap actually is
On a daily chart, a gap often shows as an open that sits clearly above the prior high or below the prior low. On intraday charts, a gap can appear at the cash open relative to the prior cash close, or between sessions when electronic books reopen. The common idea is discontinuous price discovery: the market’s next executable price is not next to the last one.
Gaps are about where trading resumes, not about drawing arrows on empty candles. Related session framing: how the US cash open differs from futures prices.
Why weekends and opens matter
Listed equity cash books pause overnight and over weekends. Earnings, geopolitics, economic prints and corporate news do not. When the next session opens, orders stack at prices that already embed that news, so the open can gap away from Friday’s close. Futures and FX trade more hours, so their “gap” behaviour can look milder or show up at different clocks — which is why UK desks watching US equities often glance at futures first, then the cash open. For index futures vocabulary, see ES and NQ explained.
Common gap labels you will hear
Desks casually sort gaps by context: a breakaway-style skip after a range, a runaway-style continuation skip in a strong trend day, or an exhaustion-style late jump that fails to hold. Those labels are descriptive shorthand from older technical literature. They are not guarantees that price will “fill” or continue. Educational readers treat labels as vocabulary, not forecasts.
Fill folklore versus process
“Gaps always fill” is folklore, not a law. Some gaps are revisited quickly; others stay open for long stretches while the new information remains priced. A healthier beginner habit is to ask what changed between the last close and the new open, whether liquidity was thin, and whether related markets (index futures, FX, oil) already moved. Process questions beat fill superstition.
Gaps versus limit moves and halted names
A gap is not the same as a limit-up or limit-down lock in a futures pit, and it is not the same as a single-stock trading halt. Halts pause matching; gaps are about the next print after a pause or after a quiet tape. Mixing those ideas confuses risk: a halt is a microstructure event; a gap is a path of prices across time.
How UK beginners can use the idea
You do not need a gap strategy to benefit from gap literacy. Before the London or New York cash open, note whether overnight futures already moved a long way from the prior cash close. After the open, note whether the first prints held the gap or traded back into the prior range. Those observations improve how you read headlines into equities, FX and risk sentiment without converting every skip into a trade.
Common mix-ups
Do not treat every overnight jump as the same story. Do not confuse a futures lead with a cash-gap fill plan. Do not ignore holidays and early closes when comparing Friday to Monday. Do not turn gap vocabulary into guaranteed mean-reversion advice.
Putting it next to a busy week
On weeks with central-bank decisions, inflation prints or geopolitical oil shocks, overnight gaps become more common because news arrives while cash is shut. The useful desk habit is still simple: identify the session break, name what news arrived, and watch whether related markets confirmed the jump before cash opened.
If you want a structured check on how you size event risk and timing around opens, a free traders assessment can highlight habits without turning this explainer into personal advice.
Conclusion
A price gap is discontinuous price discovery — often visible at weekends and session opens when news outruns the cash book. UK beginners gain more from understanding how gaps form and what related markets did overnight than from fill folklore or trade rules. Educational framing only; not a recommendation to buy or sell gaps.
