# Gap up and gap down > A price jump between sessions, when a stock opens above the prior high (gap up) or below the prior low (gap down), usually on news. Source: https://www.quantisnow.com/glossary/gap Topic: Glossary / Market structure Also known as: gap up, gap down, opening gap, price gap, gap fill Last updated: 2026-10-27 A gap up or gap down is a jump in a stock's price between one trading session and the next, leaving a range on the chart where no trading occurred. A gap up opens above the prior session's high; a gap down opens below its low. Many traders loosely use the term for any open well above or below the prior close. ## How it works Gaps happen because news arrives while the regular market is closed. Earnings after the close, FDA decisions, merger announcements, offerings and analyst rating changes before the open all reprice the stock in [after-hours](https://www.quantisnow.com/glossary/after-hours-trading) and [pre-market](https://www.quantisnow.com/glossary/pre-market-trading) trading, and the regular session opens at the new level. Common labels: - **Breakaway gap.** Starts a new trend, often on fundamental news. - **Exhaustion gap.** Comes late in a move and reverses soon after. - **Gap fill.** The price later trades back to the prior close, closing the gap. ## Why it matters for traders The open after a gap is one of the most volatile moments in a stock's day. Some gaps run all day as funds who missed the news buy in; others fade as early buyers take profits. Volume and the nature of the news usually separate the two: a gap backed by heavy [relative volume](https://www.quantisnow.com/glossary/relative-volume) and a fundamental change (an acquisition at a fixed price, a clean FDA approval) is more likely to hold than one driven by a vague press release. Gaps also expose the limits of protective orders. A [stop-loss order](https://www.quantisnow.com/glossary/stop-loss-order) cannot stop a loss that occurs while the market is closed; it fills at or near the gapped open. ## Example Hypothetical Northwind Therapeutics (ticker NWTX) trades between $9.40 and $10.20 and closes at $10.00. After the close it announces an acquisition by a large pharma company at $15.00 per share in cash. The next morning it opens at $14.60, a gap up of 46%. With a fixed cash price, the stock is unlikely to fill the gap unless the deal is in doubt. ## FAQ ### Do gaps always get filled? No. Many gaps fill within days or weeks, but gaps caused by a fundamental repricing, such as a cash acquisition or a failed drug trial, can remain open indefinitely. ## Related terms - [Pre-market trading](https://www.quantisnow.com/glossary/pre-market-trading.md): Trading in US stocks before the 9:30 a.m. ET open, typically from 4:00 a.m. ET, with thinner liquidity and wider spreads. - [After-hours trading](https://www.quantisnow.com/glossary/after-hours-trading.md): Trading in US stocks after the 4:00 p.m. ET close, usually until 8:00 p.m. ET, when earnings and other news often break. - [Catalyst](https://www.quantisnow.com/glossary/catalyst.md): An event or piece of news that causes, or is expected to cause, a significant move in a stock's price. - [Relative volume](https://www.quantisnow.com/glossary/relative-volume.md): A ratio comparing a stock's current trading volume to its typical volume for the same period, used to spot unusual activity. - [Stop-loss order](https://www.quantisnow.com/glossary/stop-loss-order.md): An order that becomes a market order to sell (or buy) once a stock trades at a specified stop price, used to limit losses. - [Earnings surprise (beat or miss)](https://www.quantisnow.com/glossary/earnings-surprise.md): The difference between a company's reported earnings and the analyst consensus estimate, described as a beat when above and a miss when below. ## On Quantisnow - [Trading news catalysts](https://www.quantisnow.com/guides/trading-news-catalysts) - [Trending tickers](https://www.quantisnow.com/top/trending) - [Earnings calendar](https://www.quantisnow.com/earnings) - [Stop loss calculator](https://www.quantisnow.com/tools/stop-loss-calculator) - [Percent gain and loss calculator](https://www.quantisnow.com/tools/percent-gain-loss-calculator)