How Futures Gaps Work: Why Futures Markets Jump Levels
Futures markets trade nearly 24 hours, so beginners assume gaps shouldn’t exist. Wrong. Futures still gap because of session breaks, economic news, illiquid overnight moves, and holiday closures. Understanding futures gaps ties directly into session timing and holiday volatility.
What a Futures Gap Actually Is
A gap happens when the market reopens at a price far away from the last traded price. This jump creates an “air pocket” on the chart where no trades occurred.
Example:
- ES closes at 4820
- Reopens at 4853
Why Futures Gap Despite Long Trading Hours
1. The Globex Daily Break
Every day futures stop trading from 5:00 PM to 6:00 PM ET. If news hits during that hour, futures reopen with a gap.
2. Major Economic Releases
Futures often gap around:
- Non-Farm Payrolls
- CPI / PPI
- FOMC rate decisions
- GDP releases
- Unexpected geopolitical events
3. Low Overnight Liquidity
Overnight sessions (especially Asian hours) have thinner books. Tiny orders can move the market far enough that the U.S. open “gaps” relative to the calm overnight drift.
4. Weekend Closures
The biggest gaps happen Sunday at the weekly Globex reopen. Two full days of news get priced in instantly.
5. Holidays and Shortened Sessions
If the market is closed or half-closed, price discovery pauses. The next session picks up wherever the market reprices itself.
Types of Futures Gaps
| Gap Type | Description |
|---|---|
| Breakaway Gap | Launches a new trend after major news |
| Continuation Gap | Happens inside a trend during thin liquidity |
| Exhaustion Gap | Final spike before a reversal |
| Weekend Gap | Occurs every Sunday open; size varies |
How Gaps Affect Your Trading
Gaps destroy risk control if you don’t plan for them. Stops don’t protect you from gaps — you get filled at the next available price, not the level you wanted.
Key impacts:
- Slippage increases massively
- Stops become market orders into empty space
- Backtesting becomes unreliable if you ignore gaps
- Gaps can change trend direction instantly
Why Some Gaps Get Filled and Others Don’t
Gaps fill when:
- Price rebalances after overreaction
- Liquidity returns during major sessions
- Institutions fade panic or chase mean reversion
Gaps don’t fill when:
- Fundamental news changes the entire outlook
- A trend is strong and institutions push continuation
- Liquidity stays thin (holidays, overnight sessions)
The Bottom Line
Futures gaps happen because trading isn’t truly 24/7 — session breaks, weekends, news releases, and thin liquidity create sudden price jumps. Learn how gaps work and respect gap risk, or you’ll get blindsided by moves you never saw coming.