What is gap level

Almost every trader who uses pending orders the concept of a gap .

After a weekend or during certain events, the price makes a sharp jump, creating a price gap between quotes.

As a result, the pending order is executed at a price significantly different from the one initially placed.

Typically, this is the first price that appears after the gap, that is, the first quote after the price break, but another execution option exists if the broker has a gap level

. The gap level is a value, in points, specified for each individual currency pair. If the price break is greater than or equal to this value, the order is executed at the first quote after the break. Otherwise, the order is executed at the pending order price.

That is, if the price gap was not large, literally a couple of points, then your order will be executed at the same price that was specified when it was placed.

For example:

You placed a pending order to buy euros for dollars on the EURUSD currency pair at a price of 1.15045, while the Gap level is 10 points.

When the price approached 1.15045, a price gap occurred and the next quote appeared at 1.15050, i.e. the gap size was only 5 points.

In this case, our pending order will still open at a price of 1.15045 since the stated Gap level was 10 points, and the price gap was only 5 points.

This indicator is important if you use pending orders and trade with high leverage , where every point counts.

Typically, the Gap level value fluctuates depending on the currency pair and can range from 8 to 40 points, although it should be noted that this tool is not used by all brokers.