Gaps & Gap Trading

Why stocks gap and how traders handle them.

1. Four Kinds of Gaps — What a price gap is, why gaps happen, and the four classic types: common, breakaway, runaway and exhaustion gaps.
2. Earnings Gaps — Why earnings reports cause the biggest gaps, with real 2025 examples from Amazon and Meta, and how traders decide whether to act on them.
3. Breakaway Gaps — What makes a breakaway gap stronger than an ordinary gap, how traders handle an entry after one, and what our data says about how often they held.
4. Gap Fills: Myth and Reality — “Gaps always fill” is one of the most repeated market sayings. Here is what our data showed about how often, and how fast, gaps of different sizes actually filled.
5. Trading the Opening Range — How day traders use the high and low of the first minutes of trading, especially on gap days, and the risks of trading the open.
6. Gap Risk and Overnight Holds — Why a stop-loss cannot protect you from an overnight gap, how often big gaps happen, and practical ways to keep gap risk manageable.