Types of stock gaps (and why context matters more than the label)¶
“Different types of gaps” is one of those topics that can become either: - a useful mental model, or - a confusing taxonomy you never apply
This guide keeps it practical so you can use it to build better scanners and alerts.
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What is a gap?¶
A gap happens when a stock opens (or trades) at a price meaningfully different from its prior close.
Traders watch gaps because they often signal: - attention - catalyst/news - unusual volume - volatility
Common gap categories (practical definitions)¶
Gap-and-go¶
The name keeps moving in the direction of the gap after the open.
Common features: - strong relative volume - clean liquidity - clear catalysts
Gap fade¶
The name pulls back against the gap direction (at least temporarily).
This is where “buy the dip” and mean-reversion traders tend to focus.
See: - Alert Window tutorial (buy the dip workflow)
Continuation gap¶
The stock was already trending, then gaps in the same direction (often around news or momentum continuation).
Exhaustion gap¶
Sometimes a big gap is the end of a move, not the start.
This is why “gap %” alone is not a strategy.
What matters more than the category¶
If you want a scanner that works in practice, prioritize: - liquidity - float / behavior regime - time of day - relative volume - broader market context
See: - Filters that matter - Columns that matter
How to use this guide in Trade Ideas¶
Use a gap list to find candidates: - Premarket gap list workflow
Then use alerts to reduce noise: - Alert Window tutorial
FAQ¶
Is a gap a trading signal?¶
No. A gap is a condition. You still need rules, risk management, and context.
What’s the best gap type to trade?¶
There’s no universal best. Pick a lane (liquidity/price/float), pick a session, then study how that category behaves in that lane.
Next¶
