Gaps in Candles

[richy96]

OK So I am pretty much new therefore I have the privelege of being able to ask what are probably really dumb questions

So what I would like to know is what causes gaps in candle charts?

The attached chart is an hourly one but I have seen the same thing on 1minute candle charts (And once greatly benefitted from one too) The attached chart is actually about a 8% drop in a share value

My dumb question is how do these gaps occur - or rather by what mechanism do they occur

If the gap happens before a candle is even seen, how did a lot of traders suddenly sell a lot of shares causing the price to fall drastically, when no one could see the new ask price to buy those shares yet?

Rich

 

[richy96]

Guys - is this question so dumb it does not even qualify for a reply?

 

[barjon]

I think the gap you have shown is the opening gap - ie: the difference from where price closed one day to where it opened the next day.

The difference comes from the market reaction to what's happened overnight and to the pre market activity in the particular share.

 

[ricmcnfl]

Yes - overnight activity causes gaps.

Spikes also create "gaps" but we see them as ascending or descending bars. They trade like a gap in that the market may try to fill them at some point.