Gap

Gaps exist because information arrives while the market is closed and the pre-open auction reprices the security in one step rather than through a sequence of trades. This is why a gap cannot be traded through: there was no opportunity to transact at the prices inside it, and a stop-loss placed there simply triggers at the open. Traders classify gaps as common, breakaway, runaway or exhaustion, though these labels are applied after the fact and cannot be distinguished at the time. The practical consequence is the one that matters: any overnight position carries the risk of the next open, whatever protective order sits on the book.