Gap

A jump in price with no trading at the levels in between.

In plain English

Stops protect you at a price only if the market trades there. When price gaps through your stop, you are filled at the next available price, which can be much worse.

Example

A stop at 95 on a market that closes at 97 and reopens at 90 fills near 90, not 95.

Trading BasicsRisk Management

See also

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