Glossary

Nobody holds a position inside a gap, which is exactly why it later acts as support or resistance.

"Gaps always fill" is one of the least reliable claims in trading. Common and exhaustion gaps usually do; a breakaway gap on genuine news often never does.

A stock that gaps constantly is one where overnight holds and stops both need rethinking.

The reason position sizing, not the stop-loss, is your real risk control.

It rarely fills while the trend lasts and often sits near the midpoint of the whole move. Telling it apart from an exhaustion gap on the day itself is the hard part.

One to three points a year, caused by money arriving after good years and leaving after bad ones.

The most significant gap type, and the one least likely to fill.

Almost always fills, and quickly. The tell is record volume followed by wide-ranging sessions that go nowhere — heavy activity with no progress.

How far this stock normally moves. Set stops in ATR multiples, not in fixed rupees.

The unit of normal movement for a given stock. Stops and sizes measured in ATR travel between instruments; ones measured in rupees do not.

It preserves point-for-point moves and destroys absolute levels — old prices are no longer prices anyone paid, and they move again at the next roll. Ratio adjustment does the same job by multiplication, preserving percentages instead of rupee distances.

The cost of being in a hurry. In illiquid stocks it is often your largest single cost.

Roughly in line with short-term interest rates in an ordinary market. A negative number is not automatically bearish: check for a dividend before expiry first, because the futures holder does not receive it and the price discounts it.

Enthusiasm at the open met heavy supply, so everyone who bought the gap is already losing. The mirror of the piercing line, and subject to the same overnight-gap caveat.

Where backtests go to die. Fills at the next open rather than the close, timeouts, rate limits and costs all run in the same direction, and the damage grows with frequency.

It shrinks to nothing at expiry by construction, so a currency futures chart can fall over a month in which the spot rate rose. Measure the premium as a distance and compare it with the move your setup expects.

The number every 8:30 am bulletin opens with. Compare it against its own level at 3:30 pm yesterday rather than against the Nifty cash close, and the basis cancels out — what remains is the genuine overnight change. It says nothing about any individual stock.

The component that turns first, and the noisiest of the three. Shrinking bars while price still rises mean the driver has lifted off the accelerator.

Real, persistent, and it needs a catalyst to close. Being right without one pays nothing.

The same idea as cost of carry in an equity future, met on a currency chart. It is a financing number, not a view about either currency.

Everyone who bought on that island is trapped, and their exit fuels the move.

Two averages arguing. The histogram turns first and is the most useful part.

A spread widens either because the market is temporarily wrong or because something genuinely changed, and the two look identical on a chart. In India the short leg usually forces the trade into futures, which is why it remains largely institutional.

The decline accelerated at the open and was fully absorbed — buyers were waiting for the gap. Indian equities gap often because the market is shut for 17.5 hours, so check whether the whole sector gapped before reading emotion into it.

The position is the spread, so the stop belongs on the spread. A stop on one leg alone converts a market-neutral trade into a naked directional one at the worst moment.

The thing deferred tax exists to account for. Permanent differences, by contrast, never reverse.

The ledger minus the cash box. A large and widening gap is not fraud; it is a question that needs an answer.

Sold on the yield and owned for the yield; designed to be written down in a crisis so that depositors are not. If it pays materially more than a bank deposit, that gap is precisely what it is paying for.

Debt on one date can be arranged; twelve months of accrued interest cannot. An implied borrowing rate far above the rates printed in the borrowings note is how the gap shows.

The reason a headline of “GIFT Nifty up 110 points” can describe a flat open. Before treating the gap between two prices as information, check they are the same instrument — the carry alone can be a hundred index points.

The price reacts to the gap between reality and expectation, so a record quarter can fall hard. Check what produced the beat too: a lower tax rate is not operational performance and will not repeat.

The C in MACD, and the half people ignore. A narrowing gap means the driver has eased off while the car is still rolling forward.

The offer letter number. Take-home is roughly 20–25% lower, and much of the gap is your own PF and gratuity rather than tax.

Bank FDs have it; corporate FDs, NCDs, credit societies and NBFC deposits have nothing equivalent, and that gap is most of the yield difference. Six accounts at one bank share one limit — the unit that multiplies the cover is the bank.

The version to use, because headlines quote the other one. A wide gap to basic EPS means a large claim on your ownership exists and has simply not been triggered yet.

A gap from the statutory rate always has a disclosed reason, and the reason is usually worth knowing.

Never cancel it to save money during an income gap — that is when it matters most.

Everyone knows how a bicycle works until they are handed a pencil. Investing has the same gap, and it is wider.

Lower volatility, milder gaps, stronger mean reversion, almost no company-specific risk. Different enough to justify genuinely different rules.

Payment for the wait and for the chance the scheme never completes. It narrows as approvals land and gaps out the moment one is in doubt.

A seller acting on a legal deadline rather than a view on value, and the gap is a subtraction anyone can do from the quarterly shareholding pattern. Listed public sector companies have repeatedly been given extended timelines that no private issuer would get.

Price can still rise while momentum fades — that gap is what divergence measures.

The price looks like a discount to the ordinary share and is not one — the gap is the money you still owe. Once the calls are met the line converts into the fully paid share.

The commission sets a return rather than a price, so the analysis moves to the allowance and the disallowances. Regulatory lag is where the margin actually goes: between an input cost rising and a tariff order recognising it, the company funds the gap itself.

ATR expands across the whole market as individual stocks gap on their numbers. A stop that was comfortable in December is often too tight in late January.

Put both after tax and the gap is usually far narrower than the headline version suggests. Which tax regime you are on moves the hurdle by points, not decimals.

The instrument for preserving the pension count across a gap between jobs. Almost nobody asks for it, which is why the count is usually gone.

SSY and PPF are tax-free; most of the rest are taxed at your slab. That gap beats any rate comparison.

Your pre-committed exit. It does not protect you against an overnight gap.

It shows as a large and growing gap between standalone and consolidated profit. A parent that looks healthy alone and weak consolidated is telling you where to look.

Often shows the good division alone is worth more than the whole company. The gap needs a catalyst to close.

A daily candle is a session, not a day. The chart draws no gap for weekends or holidays, so anything you count in bars is counted in sessions while interest, time value and news accumulate in calendar time.