Gap Risk: Weekend Gaps, News Gaps and Stop-Loss Execution

Gap risk explained: why prices reopen away from where they closed, why a stop-loss fills past its level in a gap, which markets gap most, and how to size positions that will be held through one.

Gap risk is the risk that a market reopens, or jumps, at a price away from the last one traded — so that your position is repriced in one step, without ever trading at the levels in between. A stop-loss placed inside that jump fills on the other side of it.

Key Takeaways

• A gap is a jump in price with no trades at intermediate levels. Stops in the gap fill at the next available price, not at their level.
• Weekend gaps affect every market that closes. News gaps affect open markets too.
• Single shares gap most and most often; major currency pairs least, but they do gap.
• The only control is position size: size a position held into a weekend or a scheduled event for the gap, not for the stop.

How Gaps Happen

A price chart looks continuous because in normal trading it is: each new price is a tick away from the last. A gap breaks that. Between the last trade and the next, something changes the market's view by more than one tick, and the next trade prints at the new level.

Three sources:

• Market closures. Currency and CFD markets close on Friday evening and reopen on Sunday evening. Anything that happens in between — an election result, a policy announcement, a geopolitical event — is priced entirely into the first trade on Sunday. See global market trading hours.
• Scheduled releases. In the seconds around a major data print, liquidity is pulled and the first trades after the release can be many pips from the last before it, even though the market never closed. See why markets move before economic data is released.
• Instrument-specific events. A company reports earnings after the exchange closes. Its share CFD reopens the next morning at whatever the market decided overnight. See what is stock CFD trading.

What a Gap Does to a Stop-Loss

A stop-loss order is a trigger, not a price. When the trigger level is reached, the order becomes a market order and fills at the best available price. In a gap, the first available price is the other side of the gap.

Worked Example: A Weekend Gap

Long 1.00 lot EURUSD, entered at 1.08500 on Friday afternoon, stop at 1.08200 (30 pips, $300 intended risk).

Over the weekend an unexpected political announcement lands. On Sunday evening EURUSD opens at 1.07600.

The stop worked. It closed the position at the first price the market offered. That price was 90 pips from the entry, not 30, and the realised loss was three times the intended one. This is not slippage in the ordinary sense; it is a gap, and no order type placed inside it could have filled at 1.08200.

(Illustrative. A 90-pip weekend gap on EURUSD is large but well within historical experience.)

Which Markets Gap Most

Sizing for a Gap

The response to gap risk is not a different order type; it is a different position size for positions that will be held through a known window.

The base sizing formula assumes the stop fills at its level. For a weekend hold, replace the stop distance with a plausible gap distance for that instrument. On EURUSD a trader might size for 100 pips instead of 30; on a single share ahead of earnings, for 10–15% instead of a chart level. The position gets smaller. That is the point.

Two alternatives exist, each with a cost: close the position before the window, which forfeits any move in your favour; or accept the exposure at normal size, which is a legitimate choice as long as it is a choice.

All MarketsAll accounts carry negative balance protection, so a gap cannot take the balance below zero. It can take it to zero, and the position size decides how close.

Risks Related to Gaps

• Sizing a weekend hold as if it were a Tuesday.
• Treating a near-24-hour market as gap-free. Index and commodity CFDs still close for the weekend.
• Holding a single share through earnings without deciding to. The date is on the company's calendar.
• Assuming a stop-limit order helps. On MT5 the stop-loss attached to a position is a market order on trigger; stop-limit applies to opening orders.

Can a stop-loss protect me from a gap?

It ensures the position is closed at the first available price after the gap. It cannot fill inside the gap because no one is trading there.

How big can a weekend gap be?

On major currency pairs, tens of pips is common and a hundred or more happens a few times a year. On single shares, double-digit percentage gaps around earnings are routine.

Do crypto CFDs have weekend gaps?

Less than other markets, because the underlying trades through the weekend. If the broker's crypto CFD has a daily maintenance break, it can reopen at a different price after it.

Should I close all positions before the weekend?

That is a size decision, not a rule. A position sized for a gap can be held; one sized for a 30-pip stop should not be.

Are gaps always bad?

A gap in your favour is a windfall. The risk is asymmetric only in that a favourable gap is bounded by your take-profit while an unfavourable one is bounded by the account.

Related Terms

Stop-loss orders · Slippage · Position sizing · How leverage increases trading risk · Global market trading hours