Why it matters
Gaps turn small planned risk into large real losses, especially with leverage.
Operational use: this is how the market taxes urgency. When it appears, slow down or size down.
Common trap
Believing ‘price must touch my stop’. It doesn’t.
Example
Weekend gaps or shock gaps skip your stop price entirely.
Operational cue: if you can’t point to it on the chart, in the DOM, or in your broker logs, treat it as a story and trade smaller.
Notes
Gap risk is why leverage must be treated like explosives.
Quick rule
- If you see this repeatedly, you are in a different regime than your model assumes.
- Regime change usually means position size change.
- When in doubt: trade smaller, or don’t trade.