Gap up and gap down

A gap is the jump between one session's close and the next session's open. If Nifty closes at 25,000 and opens at 25,150, that is a gap up of 150 points. An open below the previous close is a gap down. A full gap goes further: the open is above the previous day's high, or below its low, so the chart shows an empty zone.

Gaps happen because news does not wait for market hours. US markets, crude oil, company results and policy decisions all move while NSE is shut. The pre-open session from 9:00 to 9:15 am collects orders and finds the opening price, and that price can be far from yesterday's close. MCX contracts trade until late evening, so they absorb more of the global move before closing.

Gaps matter most to anyone holding overnight. A stop-loss is a trigger, not a promise of price. If you are long with a stop-loss at 24,900 and the market opens at 24,800, the order fills near 24,800. The loss is bigger than planned, and nothing on the chart could have prevented it. Only position size protects you here.

The common mistake is treating every gap the same way. Some gaps fill within the first hour. Others start a trend day and never come back. Chasing a gap-up open with a market order at 9:15 am, when spreads are wide and the first candle is large, is how many intraday traders take their worst fill of the day.