A gap is the difference between a session’s opening price and the last session’s closing price. When the open is above that close it is called a gap up; when it is below, a gap down. Stated as a percentage, gaps on different instruments can be compared.
Definition and Formula
Two prices make a gap: the last price of one session and the first price of the next. Everything that happened between them — after one close and before the next open — is outside the measurement entirely.
The size is normally stated as a percentage of the last close, because points alone are not comparable. Forty points on an index near 24,000 is a small move. Forty points on a share near 400 is a much bigger one, even though the number looks the same.
A threshold decides which gaps are listed. This site lists gaps larger than a stated percentage and treats anything smaller as ordinary day to day movement. The threshold is printed on the page so that the filter can be checked rather than taken on trust.
The gap is fixed once the session opens. What the price does afterwards is a separate measurement: the change from the last close to the current price. This site keeps the two in separate columns for that reason.
A related measurement often shown alongside is the volume ratio: the session’s volume divided by the average of the last 20 sessions. It needs 21 sessions of history to exist at all. Where that history is missing, this site leaves the stock out rather than computing an average over less.
A gap can also form for reasons that have nothing to do with the market’s view of a company. A corporate action such as a bonus issue or a stock split changes the price mechanically. The adjusted and unadjusted series then differ by exactly that factor. A gap computed across such an event measures the action, not the session.
The direction words carry no weight of their own. Gap up simply names the case where the open was above the last close, and gap down names the other. They are labels for the sign of a subtraction.
Formula: Gap % = (open − last close) ÷ last close × 100 · Volume ratio = session volume ÷ average volume of the last 20 sessions
A Worked Example
| Previous close | 1,410.00 |
|---|---|
| Open | 1,452.00 |
| Close | 1,470.00 |
| Session volume | 25,00,000.00 |
| 20-session average volume | 10,00,000.00 |
| Gap in points | 42.00 |
|---|---|
| Gap % | 2.98% |
| Change % (close vs previous close) | 4.26% |
| Volume ratio | 2.5x |
Every figure in the result column comes from the same code that builds this site’s gap up and gap down page. That computation uses the five inputs above.
What This Number Tells You
The gap states how far the opening price sat from the last close, and in which direction.
The volume ratio states how the session’s volume compared with the average of the last 20. At 1.0x the two are equal.
And What It Does Not Tell You
A gap says nothing about what follows it. The measurement ends the moment the session opens.
It does not say why the open differed from the close. Whatever happened between the two sessions is outside the two numbers being compared.
A large volume ratio is a count against a count. It states that more changed hands than usual and carries no direction of its own.
Frequently Asked Questions
Is a gap measured in points or percent?
This site states both. The percentage is what makes gaps on different instruments comparable; points alone depend on the price level.
Why are small gaps not listed?
Because a list with no threshold is not a filter. This site lists gaps above a stated percentage and prints the threshold on the page.
Why does the volume ratio need 21 sessions?
Because the average covers the last 20 and the current session is the 21st. With fewer sessions on record the average would be taken over incomplete data, so the stock is left out instead.
Is the gap the same as the day’s change?
No. The gap compares the open with the last close; the change compares the current or closing price with the last close. This site keeps them in separate columns.
Can a corporate action create a gap?
Yes. A bonus issue or a split changes the price mechanically. A gap computed across such an event measures the action, not the session.