S&P 500   4,582.35 (+0.60%)
DOW   35,476.91 (+0.17%)
QQQ   393.57 (+0.87%)
AAPL   191.79 (+0.73%)
MSFT   382.90 (+0.05%)
META   338.30 (-0.20%)
GOOGL   138.23 (+0.75%)
AMZN   147.91 (+0.60%)
TSLA   251.76 (+2.04%)
NVDA   484.03 (+1.22%)
NIO   7.33 (+1.66%)
BABA   75.07 (-2.18%)
AMD   124.97 (+2.43%)
T   16.19 (+0.06%)
F   10.90 (+5.11%)
MU   78.25 (+2.80%)
CGC   0.54 (+0.63%)
GE   119.70 (+0.72%)
DIS   92.56 (+0.06%)
AMC   7.18 (+7.16%)
PFE   29.97 (+0.94%)
PYPL   60.13 (+2.84%)
XOM   104.06 (+0.15%)
S&P 500   4,582.35 (+0.60%)
DOW   35,476.91 (+0.17%)
QQQ   393.57 (+0.87%)
AAPL   191.79 (+0.73%)
MSFT   382.90 (+0.05%)
META   338.30 (-0.20%)
GOOGL   138.23 (+0.75%)
AMZN   147.91 (+0.60%)
TSLA   251.76 (+2.04%)
NVDA   484.03 (+1.22%)
NIO   7.33 (+1.66%)
BABA   75.07 (-2.18%)
AMD   124.97 (+2.43%)
T   16.19 (+0.06%)
F   10.90 (+5.11%)
MU   78.25 (+2.80%)
CGC   0.54 (+0.63%)
GE   119.70 (+0.72%)
DIS   92.56 (+0.06%)
AMC   7.18 (+7.16%)
PFE   29.97 (+0.94%)
PYPL   60.13 (+2.84%)
XOM   104.06 (+0.15%)
S&P 500   4,582.35 (+0.60%)
DOW   35,476.91 (+0.17%)
QQQ   393.57 (+0.87%)
AAPL   191.79 (+0.73%)
MSFT   382.90 (+0.05%)
META   338.30 (-0.20%)
GOOGL   138.23 (+0.75%)
AMZN   147.91 (+0.60%)
TSLA   251.76 (+2.04%)
NVDA   484.03 (+1.22%)
NIO   7.33 (+1.66%)
BABA   75.07 (-2.18%)
AMD   124.97 (+2.43%)
T   16.19 (+0.06%)
F   10.90 (+5.11%)
MU   78.25 (+2.80%)
CGC   0.54 (+0.63%)
GE   119.70 (+0.72%)
DIS   92.56 (+0.06%)
AMC   7.18 (+7.16%)
PFE   29.97 (+0.94%)
PYPL   60.13 (+2.84%)
XOM   104.06 (+0.15%)
S&P 500   4,582.35 (+0.60%)
DOW   35,476.91 (+0.17%)
QQQ   393.57 (+0.87%)
AAPL   191.79 (+0.73%)
MSFT   382.90 (+0.05%)
META   338.30 (-0.20%)
GOOGL   138.23 (+0.75%)
AMZN   147.91 (+0.60%)
TSLA   251.76 (+2.04%)
NVDA   484.03 (+1.22%)
NIO   7.33 (+1.66%)
BABA   75.07 (-2.18%)
AMD   124.97 (+2.43%)
T   16.19 (+0.06%)
F   10.90 (+5.11%)
MU   78.25 (+2.80%)
CGC   0.54 (+0.63%)
GE   119.70 (+0.72%)
DIS   92.56 (+0.06%)
AMC   7.18 (+7.16%)
PFE   29.97 (+0.94%)
PYPL   60.13 (+2.84%)
XOM   104.06 (+0.15%)

Gap Up Stocks

A gap is a break between prices on a chart that occurs when the price of a stock makes a sharp move up or down with no trading occurring in between. Stocks that "gap up" are companies that open at prices that are significantly higher than their previous closing prices, often due to after-hours news items that positively impact investor perceptions of a company's valuation. More about gap up stocks.

MarketRank™ evaluates a company based on dividend strength, earnings, valuation, analysts forecasts, and more.
Available with a MarketBeat All Access Subscription
MarketRank™Upgrade to All Access to use the All Ranks Filter
Media sentiment refers to the percentage of positive news stories versus negative news stories a company has received in the past week.
Available with a MarketBeat All Access Subscription
Media SentimentUpgrade to All Access to use the All Sentiments Filter
Analyst consensus is the average investment recommendation among Wall Street research analysts.
Available with a MarketBeat All Access Subscription
Analyst ConsensusUpgrade to All Access to use the All Ratings Filter
CompanyGap Up %Opening PricePrevious CloseCurrent PricePrice Change Since OpenDaily VolumeIndicator(s)
Vivos Therapeutics, Inc. stock logo
Vivos Therapeutics
+171.8%$11.93$4.39$12.60+5.6%12.53 millionPositive News
High Trading Volume
RedHill Biopharma Ltd. stock logo
RedHill Biopharma
+32.0%$3.01$2.28$2.67-11.3%24.63 millionUpcoming Earnings
Short Interest ↓
News Coverage
Gap Up
High Trading Volume
Rover Group, Inc. stock logo
Rover Group
+28.0%$10.88$8.50$10.90+0.2%3.28 millionPositive News
High Trading Volume
10X Capital Venture Acquisition Corp. II stock logo
10X Capital Venture Acquisition Corp. II
+24.7%$10.60$8.50$10.60flat9,988Short Interest ↑
Gap Down
Biomea Fusion, Inc. stock logo
Biomea Fusion
+21.9%$12.12$9.94$12.38+2.1%533,970Short Interest ↑
Yoshiharu Global Co. stock logo
Yoshiharu Global
+19.2%$5.71$4.79$6.62+15.9%618,874Stock Split
Short Interest ↓
News Coverage
Gap Up
High Trading Volume
Genprex, Inc. stock logo
+18.3%$0.27$0.23$0.24-11.1%92,095Short Interest ↓
Gap Up
Fluence Energy, Inc. stock logo
Fluence Energy
+15.2%$23.36$20.27$24.48+4.8%796,771Earnings Report
News Coverage
Gap Up
Foot Locker, Inc. stock logo
Foot Locker
+15.0%$27.41$23.84$28.18+2.8%1.94 millionAnalyst Downgrade
Short Interest ↓
IGM Biosciences, Inc. stock logo
IGM Biosciences
+15.0%$5.84$5.08$5.80-0.7%3,533Short Interest ↓
GameStop Corp. stock logo
+14.8%$15.49$13.49$15.88+2.5%4.92 millionUpcoming Earnings
Options Volume
Gap Up
Kazia Therapeutics Limited stock logo
Kazia Therapeutics
+14.1%$0.73$0.64$0.71-2.7%151,007Upcoming Earnings
Short Interest ↑
News Coverage
Gap Up
vTv Therapeutics Inc. stock logo
vTv Therapeutics
+12.6%$10.60$9.41$11.10+4.7%14,123Analyst Report
Stock Split
Short Interest ↓
High Trading Volume
NetApp, Inc. stock logo
+11.2%$86.89$78.11$88.83+2.2%768,907Earnings Report
Dividend Announcement
Analyst Report
Options Volume
News Coverage
Xilio Therapeutics, Inc. stock logo
Xilio Therapeutics
+11.1%$1.20$1.08$1.20flat135Positive News
Gap Up
Snow Lake Resources Ltd. stock logo
Snow Lake Resources
+11.0%$0.69$0.62$0.69flat1,008Short Interest ↓
Positive News
Gap Up
General Motors stock logo
General Motors
+10.3%$31.87$28.89$32.13+0.8%7.78 millionShort Interest ↑
MIRA Pharmaceuticals, Inc. stock logo
MIRA Pharmaceuticals
+10.2%$4.00$3.63$3.92-2.0%1,595Gap Up
Arcimoto, Inc. stock logo
+10.2%$1.19$1.08$1.22+2.5%79,511Upcoming Earnings
News Coverage
Gap Up
Microvast Holdings, Inc. stock logo
+9.7%$1.13$1.03$1.21+6.6%1.08 millionAnalyst Report
Gap Up
Minerva Neurosciences, Inc. stock logo
Minerva Neurosciences
+9.6%$5.60$5.11$5.60flat2,315Short Interest ↑
News Coverage
Gap Up
Precipio, Inc. stock logo
+9.4%$7.20$6.58$7.20flat262News Coverage
Gap Up
Satellogic Inc. stock logo
+9.4%$1.28$1.17$1.28flat4,964Positive News
Gap Up
two stock logo
+9.2%$11.60$10.62$10.56-9.0%602Short Interest ↑
Positive News
Newbury Street Acquisition Co. stock logo
Newbury Street Acquisition
+9.0%$11.58$10.62$10.89-6.0%1,920Short Interest ↓
Positive News
Bitfarms Ltd. stock logo
+9.0%$1.46$1.34$1.51+3.1%8.05 millionAnalyst Report
Short Interest ↑
News Coverage
Gap Up
Bright Green Co. stock logo
Bright Green
+8.6%$0.30$0.27$0.29-2.9%5,579Positive News
Sight Sciences, Inc. stock logo
Sight Sciences
+8.5%$3.70$3.41$3.61-2.4%30,425Insider Buying
Short Interest ↓
Positive News
Envoy Medical, Inc. stock logo
Envoy Medical
+8.5%$1.92$1.77$1.81-5.7%18,908Analyst Report
News Coverage
Gap Down
Ohmyhome Limited stock logo
+8.4%$1.93$1.78$1.88-2.6%2,784Gap Up
QuantumScape Co. stock logo
+8.4%$6.21$5.73$6.47+4.2%1.58 millionGap Up
+8.3%$1.04$0.96$1.04flat148Gap Up
The OLB Group, Inc. stock logo
The OLB Group
+8.2%$0.96$0.89$0.93-2.8%5,148Short Interest ↓
Gap Up
PROOF Acquisition Corp I
+8.2%$13.95$12.89$13.58-2.7%1,170Gap Up
Alliance Entertainment Holding Co. stock logo
Alliance Entertainment
+8.1%$1.07$0.99$1.07flat201News Coverage
Positive News
Purple Biotech Ltd. stock logo
Purple Biotech
+8.1%$1.07$0.99$1.11+3.7%60,311Short Interest ↓
Gap Up
Cardio Diagnostics Holdings, Inc. stock logo
Cardio Diagnostics
+7.9%$2.58$2.39$2.64+2.3%646,282Positive News
Gap Down
Impel Pharmaceuticals Inc. stock logo
Impel Pharmaceuticals
+7.8%$0.64$0.60$0.54-17.0%207,707Positive News
Gap Up
Workday, Inc. stock logo
+7.5%$255.09$237.33$257.55+1.0%672,893Earnings Report
Analyst Report
News Coverage
Gyre Therapeutics
+7.4%$26.00$24.21$26.48+1.8%33,896Positive News
Gap Up
Sacks Parente Golf, Inc. stock logo
Sacks Parente Golf
+7.4%$0.71$0.67$0.70-2.7%1,236Positive News
BioSig Technologies, Inc. stock logo
BioSig Technologies
+7.2%$0.34$0.31$0.33-3.1%4,745Short Interest ↑
Gap Up
Polar Power, Inc. stock logo
Polar Power
+7.1%$0.83$0.78$0.83flat105Gap Up
Newegg Commerce, Inc. stock logo
Newegg Commerce
+7.0%$1.22$1.14$1.220.0%172,301Short Interest ↑
Gap Down
Prestige Wealth Inc. stock logo
Prestige Wealth
+7.0%$2.00$1.87$2.00flat935Positive News
Gap Down
Greenidge Generation Holdings Inc. stock logo
Greenidge Generation
+6.9%$4.93$4.61$4.85-1.6%10,442Positive News
Katapult Holdings, Inc. stock logo
+6.9%$11.90$11.13$12.49+5.0%5,255Gap Up
iHuman Inc. stock logo
+6.9%$2.63$2.46$2.63flat212Short Interest ↑
News Coverage
Alpha Technology Group Limited stock logo
Alpha Technology Group
+6.8%$17.03$15.94$17.27+1.4%7,987Gap Up
NEXGEL, Inc. stock logo
+6.8%$1.88$1.76$1.88flat282Short Interest ↓
Lilium stock logo
+6.7%$1.11$1.04$1.06-4.5%1.84 millionUpcoming Earnings
Short Interest ↑
Gap Up
Construction Partners, Inc. stock logo
Construction Partners
+6.7%$44.92$42.09$43.90-2.3%7,417Short Interest ↑
Direct Digital Holdings, Inc. stock logo
Direct Digital
+6.7%$11.01$10.32$10.66-3.2%64,755Analyst Report
Short Interest ↑
Orion Energy Systems, Inc. stock logo
Orion Energy Systems
+6.6%$0.92$0.86$0.92+0.5%10,728Positive News
Gap Up
Socket Mobile, Inc. stock logo
Socket Mobile
+6.6%$1.46$1.37$1.46flat14,944Positive News
Gap Up
Ontrak, Inc. stock logo
+6.6%$0.60$0.57$0.61+1.0%18,491Short Interest ↓
Positive News
Gap Up
Casa Systems, Inc. stock logo
Casa Systems
+6.5%$0.54$0.51$0.54flat3,364Short Interest ↓
Gap Up
The Arena Group Holdings, Inc. stock logo
The Arena Group
+6.5%$2.14$2.01$2.14flat4,186Options Volume
SunCar Technology Group Inc. stock logo
SunCar Technology Group
+6.4%$9.18$8.63$8.50-7.4%4,313Positive News
Gap Down
CLPS Incorporation stock logo
CLPS Incorporation
+6.4%$1.26$1.18$1.26+0.4%5,816Dividend Announcement
Short Interest ↑
Carmell Co. stock logo
+6.3%$3.04$2.86$3.04flat814Positive News
Tuya Inc. stock logo
+6.3%$2.03$1.91$2.12+4.4%209,590Analyst Upgrade
Longboard Pharmaceuticals, Inc. stock logo
Longboard Pharmaceuticals
+6.2%$4.09$3.85$4.00-2.2%1,998Gap Up
Amprius Technologies, Inc. stock logo
Amprius Technologies
+6.1%$3.81$3.59$3.74-1.8%11,767Short Interest ↑
Positive News
Quantum Co. stock logo
+6.0%$0.32$0.30$0.32+0.7%59,782Short Interest ↑
The Real Good Food Company, Inc. stock logo
Real Good Food
+5.9%$1.96$1.85$1.96flat4,828Short Interest ↓
Positive News
Waterdrop Inc. stock logo
+5.9%$1.26$1.19$1.26flat310Positive News
ClearSign Technologies Co. stock logo
ClearSign Technologies
+5.8%$1.46$1.38$1.48+1.2%11,938Short Interest ↓
Gap Up
Meihua International Medical Technologies Co., Ltd. stock logo
Meihua International Medical Technologies
+5.8%$1.83$1.73$1.80-1.6%10,991Short Interest ↓
Positive News
Gap Up
Renalytix Plc stock logo
+5.8%$0.55$0.52$0.55flat604Short Interest ↓
Positive News
Gap Up
Universal Electronics Inc. stock logo
Universal Electronics
+5.7%$7.93$7.50$7.87-0.8%7,901Insider Buying
iCAD, Inc. stock logo
+5.7%$1.66$1.57$1.65-0.6%45,121News Coverage
Gap Up
SES AI Co. stock logo
+5.7%$2.04$1.93$1.99-2.5%8,993Short Interest ↓
Carbon Revolution Public Limited stock logo
Carbon Revolution Public
+5.7%$40.69$38.50$46.00+13.0%64,394Analyst Report
Gap Up
Chijet Motor Company, Inc. stock logo
Chijet Motor
+5.6%$1.69$1.60$1.69flat176Positive News
Gap Up
Frequency Electronics, Inc. stock logo
Frequency Electronics
+5.6%$9.69$9.18$9.70+0.1%522Short Interest ↓
Gap Up
Vestis Co. stock logo
+5.5%$17.66$16.74$17.49-1.0%155,780Gap Up
Vicarious Surgical Inc stock logo
Vicarious Surgical
+5.4%$0.32$0.30$0.31-2.4%8,224Gap Up
GreenPower Motor Company Inc. stock logo
GreenPower Motor
+5.4%$2.75$2.61$2.71-1.5%3,525Short Interest ↓
Positive News
Gap Up
Duos Technologies Group, Inc. stock logo
Duos Technologies Group
+5.3%$3.36$3.19$3.36flat929Short Interest ↑
Gap Up
Perma-Fix Environmental Services, Inc. stock logo
Perma-Fix Environmental Services
+5.3%$6.95$6.60$7.37+6.0%26,193News Coverage
Positive News
Cardlytics, Inc. stock logo
+5.3%$7.96$7.56$8.14+2.3%40,122Short Interest ↑
Recursion Pharmaceuticals, Inc. stock logo
Recursion Pharmaceuticals
+5.3%$7.39$7.02$7.33-0.8%734,608Positive News
Global Blue Group Holding AG stock logo
Global Blue Group
+5.3%$5.00$4.75$5.00flat626News Coverage
MoneyHero Limited stock logo
+5.2%$4.24$4.03$4.30+1.4%448,995News Coverage
Gap Up
Movano Inc. stock logo
+5.2%$0.93$0.88$0.92-1.1%51,887Short Interest ↑
Gap Up
Primech Holdings Ltd. stock logo
+5.2%$2.43$2.31$2.30-5.3%3,256Gap Up
NetSol Technologies, Inc. stock logo
NetSol Technologies
+5.1%$2.28$2.17$2.28flat145Gap Up
Electra Battery Materials Co. stock logo
Electra Battery Materials
+5.0%$0.49$0.46$0.49flat5,295Short Interest ↓
Gap Down
Markforged Holding Co. stock logo
+5.0%$0.77$0.73$0.77flat12,874Gap Up
Jasper Therapeutics, Inc. stock logo
Jasper Therapeutics
+5.0%$0.68$0.65$0.68flat1,263Gap Up
Charge Enterprises, Inc. stock logo
Charge Enterprises
+5.0%$0.17$0.16$0.16-2.9%19,884Short Interest ↑
Gap Up
Shengfeng Development Limited stock logo
Shengfeng Development
+4.9%$14.21$13.54$13.66-3.9%1,423Short Interest ↑
Ford Motor stock logo
Ford Motor
+4.9%$10.88$10.37$10.90+0.2%8.75 millionGap Up
Veritone, Inc. stock logo
+4.9%$2.35$2.24$2.45+4.3%45,868Positive News
Gap Up
Nektar Therapeutics stock logo
Nektar Therapeutics
+4.9%$0.44$0.42$0.43-2.1%40,810Analyst Report
FREYR Battery stock logo
FREYR Battery
+4.9%$1.50$1.43$1.53+1.8%391,181Short Interest ↓
Wallbox stock logo
+4.9%$1.50$1.43$1.50flat2,694Gap Up
Personalis, Inc. stock logo
+4.8%$1.73$1.65$1.55-10.4%97,642Short Interest ↑
Gap Up
LumiraDx Limited stock logo
+4.8%$0.12$0.11$0.11-8.8%1.21 millionShort Interest ↑

Key Points

  • Strategies for trading stock gaps can include buying right after the gap occurs and selling when prices level or decline.
  • Buying gaps and holding onto them over time to take advantage of momentum may provide slower returns but potentially bigger gains.
  • Shorting a gap involves borrowing shares from an institution to sell once prices fall.
  • 5 stocks we like better than Ranpak
What does a gap up mean in stocks? Green and black stock chart

Have you ever woken up, poured your coffee, opened the financial news, and been shocked to see a dramatic jump in a stock’s price since yesterday? 

A "gap up" occurs when the opening price of a stock is significantly higher than the prior day’s closing price. An unexpected news event, such as a positive earnings report usually cause this. It usually suggests that investors feel optimistic and buy enthusiastically, though this isn't always the case.

In this article, we’ll break down gap-up stocks by defining what they are and how to identify them. We’ll also provide an overview of gaps so you can understand how to interpret a stock chart and go over the most common gap trading strategies.

What Does Gap Mean?

We can divide gap types into two categories: full and partial. 

A full gap occurs when the price moves up or down in a single trading session, leaving no overlap between the day’s close and open prices. Partial gaps involve overlap between two trading days, typically caused by an overnight gap that partially fills during regular market hours.

As for how to find gap up stocks, you can find them at any time. However, they are particularly common during earnings season when top line and/or earnings per share numbers beat analysts’ expectations and cause a stock to surge.

An online gap up stocks screener offers an easy way to identify and track gap-up stocks and can enable you to know how to find stocks before they gap up.

Gap Up Stocks

What does gap up mean in stocks? A gap-up stock opens trading higher than the previous day’s closing price, which means a sharp move with no other trading occurring before or after the gap. You can identify gap-up stocks after hours and stocks gapping up pre-market. The gapping up stock meaning may include the release of news about the stock, such as a good earnings report or some geopolitical event that may incite speculators to bid up the price of the stock.

What does gap up mean in stock trading? Gap up stocks meaning is a significant stock trading opportunity for you. However, you need discipline to follow the trend and set trailing stops that allow you to exit the trade when the direction of the stock no longer supports that trend.

Gap Down Stocks 

Gap-down stock is the opposite of a gap-up stock, which happens when trading in a particular asset opens significantly lower than the previous day’s closing price. 

Like a gap up, it's usually caused by unexpected events, such as an analyst downgrade or abrupt, concerning news about the company. The opening of exchanges may also cause stocks to gap down if investors are surprised by new developments since markets closed yesterday and don't want to own the security any longer, leading them to sell it off en masse. Then you may find stocks gapping up premarket.

Common Gaps

Common gaps are neither full nor partial gaps, but they still play an important role in stock analysis. Common gaps are areas on a chart where the price has gapped away from its previous level, but there is no discernible pattern for the gap. This could be due to an unexpected news event or a sudden shift in investor sentiment. Common gaps often don't last long; they quickly reverse as traders react to news or changing sentiment around the security. That's why you must closely monitor your position if you're considering entering or exiting trades based on common gap signals.

Breakaway Gaps 

These gaps take place at the end of a pricing pattern and signal the start of a new trend. A breakaway gap will typically coincide with high volume since it shows strong buying or selling pressure that breaks away from the previous price range. Most breakaway gaps tend to be upward, but they can be downward, too.

Continuation Gaps 

Continuation gaps occur in the middle of a price pattern and signal a rush of buyers or sellers who share a common belief in the underlying stock’s future direction. This type of gap often indicates that the current trend is likely to continue, although not always. Like breakaway gaps, most continuation gaps tend to be upward, but they can also be downward.

When continuation gaps form on a chart, pay attention to volume levels, as this will help confirm whether or not the gap is truly significant or simply noise caused by market fluctuations. If volume spikes during the gap period, it usually signals further strength and the possibility of an extended trend.

Exhaustion Gaps 

These gaps occur towards the end of a pricing pattern and represent a final attempt to set a new high or low. Exhaustion gaps will coincide with low volume as buyers and sellers become exhausted from attempting to push the price further. This type of gap indicates that the current trend is likely nearing an end, so keep an eye on your positions to avoid getting caught in a reversal.

Exhaustion gaps can be upward or downward, but up-gaps are more common since they usually occur following uptrends where investors try to push prices higher before the move runs out of steam. Downward exhaustion gaps often signify a long downtrend ending, which can provide an opportunity to enter a long position as prices reverse.

What is a Gap Fill? 

A gap fill is attempting to sell or buy a security to close gaps between two prices. In other words, it’s an attempt at trading directly from one price point back up (or down) towards its original closing price when it opened. Gap fills are usually performed by traders looking for quick profits — especially after large news events or announcements that cause gaps in the market — and they can provide an opportunity for arbitrage if done correctly.

How to Play Gap-Up Stocks 

As an investment strategy, trading gaps involve stocks that have above-average volatility. This also means it entails above-average risk. However, you can still trade gaps successfully (and profitably). Here are some guidelines that can help you avoid poor gap-up stock trades.

  • If a stock gap up has started to fill, it will almost always continue in that direction. This is because the stock has no immediate support and resistance.
  • Be sure you understand the type of gap you're trading. An exhaustion gap and a continuation gap move in opposite directions.
  • Before you take a position, be sure that the stock price has started to break in the direction you foresee. Individual investors are the ones who tend to get overly enthusiastic about a stock. This plays into the hands of institutional investors who may support the trend to boost their portfolios.
  • The volume should be consistent with the kind of gap you're trading.

Once you're familiar with the mechanics of stocks gapping up and understand how to look for potential gap trading opportunities, it’s time to look at some common gap trading strategies. These involve having clear rules for entering and exiting a trade. Gap trading can be risky and having the discipline to follow entry and exit points is one way to help minimize that risk.

Example of a Gap Up Trading Strategy 

When it comes to playing gaps in stocks, there are several strategies you can use to make money. One strategy involves buying right after the stock gapping up occurs and selling once prices start to level out or go back down to normal levels. This approach is more risky, however, as it requires you to time the market perfectly and be able to quickly identify when prices will begin leveling off or declining again.

Another option is to buy gap up stocks today and hold onto them for longer periods to take advantage of momentum-based moves or capture any sustained increase in a stock’s price over time. This strategy requires greater patience and while it may provide slower returns initially, it could lead to bigger gains over time if done correctly.

Finally, you may also choose to short-sell gaps if you believe that prices won’t stay high for long due to underlying fundamentals or overall market sentiment about a particular company or sector. Shorting entails borrowing shares from someone else (usually an institution) and then selling them when prices fall afterward to book profits from the decline in value.

Each gap-up strategy has a short and a long trading signal. Most gap-up trading occurs one hour after the market opens to allow time for the stock price to settle into a range.

No matter what strategy you use, be sure to set trailing stops that provide a point where you exit the trade in case the trade starts moving in the opposite direction. For example, if you buy a stock at $50, you could set a trailing stop of 5 percent, in this case $47.50. If the stock rises to $60, you raise the stop to $55.50 (5% of $60) and keep raising it while the price rises. The opposite would occur if you're trying to short the same stock at $50. In this case, you would set a trailing stop at $53.50. If the price drops to $40, you would reset the stop at $42. Trailing stops will usually be tighter (smaller) for partial gap stocks instead of full gap stocks.

For example, on Friday, September 1, shares of automated supply-chain solutions company Ranpak Holdings Corp. (NYSE: PACK) gapped up before trading on Thursday, August 31, after Ranpak insider trades resulted in the purchase of additional shares in the company. 

Overview of Rank

The stock had previously closed at $5.91 but opened at $6.05, subsequently rising to $6.22. 

To play the gap on this stock, you would need to analyze the type of gap and the volume of the stock. You may consider buying and holding onto the stock if it's a continuation gap. However, you may consider short-selling the stock if it's an exhaustion gap. To figure out which option is best, be sure to take note of any news or announcements that may affect the stock's price movement.

If you decided to go long on Ranpak Holdings Corp., you could set a trailing stop of 5 percent and monitor the price movement closely. If the Ranpak chart shows the price continues to rise, you could continue raising the stop to protect your profits. On the other hand, if you decide to short-sell the stock, you could set a trailing stop and keep a close eye on the stock in case the price drops and you need to reset it.

Do Gap Trading Strategies Work? 

Many investors engage in momentum trading. To these investors, “trading the gap” (also called “gapping up stocks”) isn't logical. After all, what goes up must come down — and usually hard. They reason that if a stock gaps up, it’s due for a correction.

This thinking can be true for stocks with weak fundamentals, or when the market is trending down. In those cases, gap-up stocks rarely stay at those levels, no matter how strong the lift. However, that thinking can work against investors.

For example, in a bullish market, a stock with strong fundamentals may gap after a strong earnings report. When institutional investors learn about the bullish report, they may increase the price. As a trader, if you stay away from the stock, believing that momentum is working against you, you may miss out on significant gains.

The Ups and Downs of Playing the Gap 

One of the easiest ways to trade stocks, especially as a day trader, is to look for gap-up stocks. Trading gap-up stocks requires a disciplined system requiring trailing stops at well-defined entry and exit points to limit loss and protect profits. 

Of course, not every gap stop is ideal for trading. Pay attention to other technical indicators, such as trading volume, to decide whether or not a stock may produce profits for you. 

Claire Shefchik

About Claire Shefchik

  • shefchikclaire@gmail.com

Contributing Author

Energy, Commodities


Claire Shefchik has been a contributing writer for MarketBeat since 2023.

Areas of Expertise

Finance, business


B.A. in writing, University of Arizona; MFA in writing, Sarah Lawrence College 

Past Experience

Business editor, BVI Beacon, senior writer, Business BVI

More Stock Ideas from MarketBeat

My Account -