Generally, in a daily chart, when a stock opens higher than the previous high price, a gap up is said to have occurred. If the opening price is lower than yesterday's low price, it is a gap down. There are actually different types of gaps in reality, I will go into details in my later entries.

There is a general belief that gaps will be closed/covered some time in the future, and hence profits can be made if that happens.

However, I sometimes do not pay much attention to gaps, as the time for stocks to close/cover the gaps might be too long.

Personally, I feel that if a gap takes too long to cover, it is not significant anymore. For example, if an upward gap is covered only after weeks/months, the stock might be on its way down after that, instead of the wider belief that the stock will rebound. In recent volatile market, a few days is considered a long time to me. That means if a gap up is not covered as soon as possible, by the time it is covered, it could be game over.