Stock Market Glossary
Gap
Price gap in the chart between two consecutive periods.
In brief: Price gap in the chart between two consecutive periods.
Meaning in practice
Gaps often arise after earnings, takeovers or market openings. They can strengthen in the direction of the trend (breakaway gap) or signal exhaustion (exhaustion gap) – volume helps with the classification.
Context for investors and traders
When analysing a company, this term is meaningful only alongside the business model, industry and development across several reporting periods. One-off effects, accounting choices and the corporate cycle can move individual metrics.
How to use this in practice
A robust assessment looks across several reports: revenue quality, operating margin, investment, debt and cash flow can tell a different story from one metric. Changes in the competitive setting also matter more than an isolated snapshot.
What to keep in mind
Compare companies with suitable peers and check whether one-off effects, buybacks or accounting choices shift the metric. A strong number does not automatically explain a share valuation.
