Gapping
Categories: Trading
You bought a hog (motorcycle) for a low price of $1,000 last week. They went on sale before the EuroFactory went up. This week, you see the same motorcycle listed at a higher price. Nothing happened to show why prices for the motorcycle went up, but between the time you bought yours and now...they did. To you this looks like a good opportunity for you to sell your bike for a higher price and make a profit.
On Wall Street, when the market opens with prices higher or lower than the previous day without anything happening, brokers will either want to buy or sell quickly to get the most out of their investments.