Gap

Understand forex and stock market gaps, how they form, and the concept of 'gap closure' due to market imbalance. Learn why traders watch these formations.

Published · Updated · Methodology: Price Action

Part of: Gap Trading

  • Methodology: Price Action
  • Content type: educational
  • Markets: Forex, Stocks

Source video

Decoded from: Te explico en 60 segundos qué es un GAP 📈 Visita mi canal de YouTube y únete al grupo de Telegram by Brandon Arcila — watch the original

Key timestamps:

  • 0:00 - Introduction to Gaps
  • 0:06 - Market close/open times in Forex
  • 0:14 - Explanation of Gap closure
  • 0:25 - Reason for Gap closure (imbalance)
  • 0:39 - Trading Gaps in stocks vs. forex

Strategy overview

A gap is a discontinuity in the chart — a jump between one bar's close and the next bar's open, across a price range where no trading actually happened. What makes this entry worth reading is where its second beat goes: not to the pattern itself, but to when the forex market closes and reopens. That ordering is the argument. A gap is not something price does; it is something the calendar does to the chart. It can only appear where the tape stops, which is why the first thing to know about gaps is the schedule of the market you are trading, not the shape on the screen.

From there the clip moves to closure and then, immediately, to the reason for closure — imbalance. That is a mechanism claim rather than a trigger: it says why price tends to be drawn back through the untraded range, without saying at what point, on what timeframe, or with what confirmation an entry would be justified. Distinguishing those two things matters, because the phrase "gaps close" gets repeated as if it were an instruction when it is an observation about tendency, and the tendency is exactly what the imbalance explanation is trying to account for.

The final stretch of this 60-second Spanish-language explainer from Brandon Arcila's channel goes to something most short-form clips skip: gaps in stocks versus gaps in forex. That is a portability caveat, and it is the most useful part. A market that trades around the clock through the week concentrates its gaps at the weekend boundary; a market that shuts every evening produces them nightly and on news, with different frequency, size and behavior. Everything a trader believes about gap closure is therefore conditional on which of those two worlds the belief was formed in. This entry is a definition rather than a setup — it carries no timeframe or indicator because a gap is read off two adjacent bars at any scale, and its size is set by how long the market was shut — and no rule set was extracted from it.

Topics

gap trading strategy · price action strategy · forex strategy · stock market gaps · tradingview strategy · pine script · market gaps explained · trading strategy · gap closure · trading forex gaps

Frequently asked questions

What is a gap in trading?

A gap is a break in price continuity between one bar's close and the next bar's open — a range of prices where no transactions took place. It appears when a market reopens away from where it stopped, so gaps exist only where trading has a scheduled interruption.

Why do gaps tend to get closed?

The source video attributes gap closure to imbalance: the untraded range represents orders that never met, and price is drawn back through it as that imbalance resolves. This is an explanation of the tendency, not a timing rule — it says nothing about when or whether a given gap fills.

Do gaps work the same way in stocks and in forex?

No, and the video closes on precisely this distinction. Forex trades continuously through the week, so gaps cluster around the weekend reopen; equities close daily and gap on overnight news and events. Frequency, typical size and closure behavior differ between the two, so gap habits formed in one market do not transfer unexamined to the other.

Is this entry a gap trading strategy?

No — it is a concept explainer, so no entry, exit or risk rules were extracted from it. Strategy Decoder catalogs both definitional videos like this one and full rule-based setups, and marks which is which so you know what you are looking at before you try to test it.

About this strategy page

This trading strategy was decoded by Strategy Decoder's AI from a public YouTube trading video and turned into a structured, reviewable specification. In the interactive app this page shows the full entry and exit logic, risk management settings, the indicators involved with their parameters, AlgoWizard-compatible logic and a Pine Script export ready for TradingView backtesting — plus an automated backtest verdict when one has been computed for this strategy.

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