DEFINITION of 'Gapping'

In general, a trading strategy in which the participant borrows short and lends long. This strategy gives the lender an overall better interest rate as short rates are generally lower than long rates. Also in technical analysis, gapping can refer to the use of a gap strategy which looks at stocks that display price gaps from previous closes.


To employ a gap strategy an investor can scan the morning prices for a gap and watch to see what the stock does in the first couple hours of the trading day. In general, if the price goes up, it signals a buy, and if it goes down, a short. There are several variations of the gap strategy.

  1. Short Selling

    Short selling is the sale of a security that is not owned by ...
  2. Short (or Short Position)

    A short position is the sale of a borrowed security, commodity ...
  3. Stock

    A type of security that signifies ownership in a corporation ...
  4. Long (or Long Position)

    1. The buying of a security such as a stock, commodity or currency, ...
  5. Wall Street

    1. A street in lower Manhattan that is the original home of the ...
  6. New York Stock Exchange - NYSE

    A stock exchange based in New York City, which is considered ...
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