A price gap means that either the current bid price is higher than the ask price of the previous quote, or the current ask price is lower than the bid of the previous quote.
It is important to understand that you may not be always able to see a price gap on the chart since it can be enclosed in a candle. As the definition implies, in some cases you would need to observe the ask price, while the chart shows only the bid price.
The following rules apply to pending orders executed during a price gap:
- if your Stop Loss is within the price gap, the order will be closed by the first price after the gap
- if the pending order price and Take Profit level are within the price gap, the order will be cancelled
- if the Take Profit order price is within the price gap, the order will be executed by its price
- Buy Stop and Sell Stop pending orders will be executed by the first price after the price gap
- Buy Limit and Sell Limit pending orders will be executed by the order’s price.
Let's imagine that a bid is listed as 1.09004 and ask is 1.0900. In the next tick, bid becomes 1.09012, and ask–1.0902. Then:
- if your Sell order has Stop Loss level at 1.09005, the order will be closed at 1.0902
- if your Take Profit level is 1.09005, the order will be closed at 1.0900
- if your Buy Stop order price is 1.09002 with Take Profit at 1.09022, the order will be cancelled
- if your Buy Stop price is 1.09005, the order will be opened at 1.0902
- if your Buy Limit price is 1.09005, the order will be opened at 1.0900.