QQQ   324.08 (-0.57%)
AAPL   168.49 (-0.44%)
MSFT   287.02 (-0.74%)
META   177.49 (-0.48%)
GOOGL   118.84 (-0.72%)
AMZN   140.64 (-1.44%)
TSLA   859.89 (-2.62%)
NVDA   179.42 (-0.86%)
NIO   20.82 (+3.84%)
BABA   94.87 (+2.64%)
AMD   98.12 (-0.94%)
MU   62.32 (+1.50%)
T   18.04 (+0.17%)
CGC   3.15 (-4.26%)
GE   78.90 (+2.28%)
F   15.83 (+2.13%)
DIS   117.69 (+4.68%)
AMC   25.46 (+7.56%)
PYPL   99.11 (+0.20%)
PFE   48.29 (-3.32%)
NFLX   242.70 (-0.58%)
QQQ   324.08 (-0.57%)
AAPL   168.49 (-0.44%)
MSFT   287.02 (-0.74%)
META   177.49 (-0.48%)
GOOGL   118.84 (-0.72%)
AMZN   140.64 (-1.44%)
TSLA   859.89 (-2.62%)
NVDA   179.42 (-0.86%)
NIO   20.82 (+3.84%)
BABA   94.87 (+2.64%)
AMD   98.12 (-0.94%)
MU   62.32 (+1.50%)
T   18.04 (+0.17%)
CGC   3.15 (-4.26%)
GE   78.90 (+2.28%)
F   15.83 (+2.13%)
DIS   117.69 (+4.68%)
AMC   25.46 (+7.56%)
PYPL   99.11 (+0.20%)
PFE   48.29 (-3.32%)
NFLX   242.70 (-0.58%)
QQQ   324.08 (-0.57%)
AAPL   168.49 (-0.44%)
MSFT   287.02 (-0.74%)
META   177.49 (-0.48%)
GOOGL   118.84 (-0.72%)
AMZN   140.64 (-1.44%)
TSLA   859.89 (-2.62%)
NVDA   179.42 (-0.86%)
NIO   20.82 (+3.84%)
BABA   94.87 (+2.64%)
AMD   98.12 (-0.94%)
MU   62.32 (+1.50%)
T   18.04 (+0.17%)
CGC   3.15 (-4.26%)
GE   78.90 (+2.28%)
F   15.83 (+2.13%)
DIS   117.69 (+4.68%)
AMC   25.46 (+7.56%)
PYPL   99.11 (+0.20%)
PFE   48.29 (-3.32%)
NFLX   242.70 (-0.58%)
QQQ   324.08 (-0.57%)
AAPL   168.49 (-0.44%)
MSFT   287.02 (-0.74%)
META   177.49 (-0.48%)
GOOGL   118.84 (-0.72%)
AMZN   140.64 (-1.44%)
TSLA   859.89 (-2.62%)
NVDA   179.42 (-0.86%)
NIO   20.82 (+3.84%)
BABA   94.87 (+2.64%)
AMD   98.12 (-0.94%)
MU   62.32 (+1.50%)
T   18.04 (+0.17%)
CGC   3.15 (-4.26%)
GE   78.90 (+2.28%)
F   15.83 (+2.13%)
DIS   117.69 (+4.68%)
AMC   25.46 (+7.56%)
PYPL   99.11 (+0.20%)
PFE   48.29 (-3.32%)
NFLX   242.70 (-0.58%)

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.

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CompanyGap Up %Opening PricePrevious CloseCurrent PricePrice Change Since OpenDaily VolumeIndicator(s)
Sentage Holdings Inc. stock logo
SNTG
Sentage
+367.8%$3.20$0.68$3.25+1.4%294,064Stock Split
Short Interest ↑
News Coverage
Negative News
Gap Up
Trading Halted
High Trading Volume
PLAYSTUDIOS, Inc. stock logo
MYPS
PLAYSTUDIOS
+153.3%$10.03$3.96$10.00-0.3%3,134Analyst Revision
Gap Up
AcelRx Pharmaceuticals, Inc. stock logo
ACRX
AcelRx Pharmaceuticals
+53.6%$0.36$0.24$0.31-13.4%47.36 millionAnalyst Report
Short Interest ↑
News Coverage
Positive News
Gap Up
High Trading Volume
T2 Biosystems, Inc. stock logo
TTOO
T2 Biosystems
+44.3%$0.23$0.16$0.20-12.5%503.80 millionUpcoming Earnings
Analyst Report
News Coverage
Gap Up
High Trading Volume
Esports Entertainment Group, Inc. stock logo
GMBL
Esports Entertainment Group
+32.0%$0.60$0.45$0.60flat18.58 millionShort Interest ↑
Positive News
Gap Up
High Trading Volume
Vacasa, Inc. stock logo
VCSA
Vacasa
+31.3%$3.99$3.04$4.05+1.5%35.02 millionNews Coverage
Gap Up
High Trading Volume
Arhaus, Inc. stock logo
ARHS
Arhaus
+30.5%$8.35$6.40$7.93-5.0%3.83 millionAnalyst Report
Short Interest ↓
Analyst Revision
News Coverage
Gap Up
High Trading Volume
FlexShopper, Inc. stock logo
FPAY
FlexShopper
+26.8%$1.42$1.12$1.65+16.2%5.13 millionNews Coverage
Gap Up
High Trading Volume
Enovix Co. stock logo
ENVX
Enovix
+24.1%$20.04$16.15$21.13+5.4%15.44 millionEarnings Report
Analyst Report
Options Volume
News Coverage
Gap Up
High Trading Volume
AMTD Digital Inc. stock logo
HKD
AMTD Digital
+21.8%$265.00$217.60$214.00-19.2%72,856Gap Up
Matterport, Inc. stock logo
MTTR
Matterport
+21.4%$6.30$5.19$5.98-5.1%50.60 millionEarnings Report
Analyst Report
Options Volume
News Coverage
Gap Up
High Trading Volume
Veru Inc. stock logo
VERU
Veru
+20.8%$14.22$11.77$16.01+12.6%58.81 millionNews Coverage
Gap Up
Trading Halted
High Trading Volume
GWAV
Greenwave Technology Solutions
+19.2%$4.29$3.60$3.57-16.8%4.32 millionNews Coverage
Positive News
Gap Up
High Trading Volume
NOTV
Inotiv
+17.2%$24.30$20.73$24.00-1.2%527,344Analyst Report
News Coverage
Gap Up
High Trading Volume
Pasithea Therapeutics Corp. stock logo
KTTA
Pasithea Therapeutics
+17.1%$1.37$1.17$1.25-8.8%12.03 millionShort Interest ↑
News Coverage
Gap Up
High Trading Volume
Applied Therapeutics, Inc. stock logo
APLT
Applied Therapeutics
+16.9%$1.45$1.24$1.33-8.3%177,882Short Interest ↓
Positive News
Gap Up
VZIO
VIZIO
+16.6%$12.17$10.44$12.33+1.3%3.58 millionEarnings Report
Analyst Report
Insider Selling
Gap Up
High Trading Volume
Kala Pharmaceuticals, Inc. stock logo
KALA
Kala Pharmaceuticals
+16.5%$0.41$0.35$0.33-19.1%8.21 millionShort Interest ↓
News Coverage
Positive News
Gap Up
High Trading Volume
Dillard's, Inc. stock logo
DDS
Dillard's
+16.3%$289.00$248.56$292.75+1.3%619,863Gap Up
High Trading Volume
Bright Minds Biosciences Inc. stock logo
DRUG
Bright Minds Biosciences
+15.8%$1.10$0.95$1.00-9.1%31,294Positive News
Gap Up
Dutch Bros Inc. stock logo
BROS
Dutch Bros
+14.7%$50.50$44.01$46.29-8.3%6.57 millionEarnings Report
Analyst Report
Short Interest ↓
News Coverage
Gap Up
High Trading Volume
Cyclacel Pharmaceuticals, Inc. stock logo
CYCC
Cyclacel Pharmaceuticals
+13.5%$1.51$1.33$1.68+11.3%9.98 millionEarnings Report
Short Interest ↑
News Coverage
Positive News
Gap Up
High Trading Volume
Exela Technologies, Inc. stock logo
XELA
Exela Technologies
+13.4%$1.52$1.34$1.41-7.2%16.41 millionShort Interest ↑
Gap Up
High Trading Volume
Greenlane Holdings, Inc. stock logo
GNLN
Greenlane
+13.2%$3.68$3.25$3.58-2.7%319,478Upcoming Earnings
Stock Split
Short Interest ↑
Gap Up
High Trading Volume
Sera Prognostics, Inc. stock logo
SERA
Sera Prognostics
+12.6%$2.85$2.53$2.60-8.8%53,996News Coverage
Gap Up
Quhuo Limited stock logo
QH
Quhuo
+12.6%$0.47$0.42$0.46-3.1%456,312Stock Split
Gap Up
High Trading Volume
Archer Aviation Inc. stock logo
ACHR
Archer Aviation
+12.3%$4.75$4.23$4.78+0.6%9.60 millionNews Coverage
Gap Up
High Trading Volume
ProPhase Labs, Inc. stock logo
PRPH
ProPhase Labs
+12.3%$12.00$10.69$11.50-4.2%295,401Gap Up
High Trading Volume
Eco Wave Power Global AB (publ) stock logo
WAVE
Eco Wave Power Global AB (publ)
+12.2%$5.50$4.90$5.28-3.9%12,279Short Interest ↑
Gap Up
Loyalty Ventures Inc. stock logo
LYLT
Loyalty Ventures
+12.2%$3.31$2.95$2.97-10.3%948,840News Coverage
Positive News
Gap Up
CleanSpark, Inc. stock logo
CLSK
CleanSpark
+11.9%$6.69$5.98$5.70-14.8%7.04 millionAnalyst Report
Options Volume
News Coverage
Gap Up
High Trading Volume
TMC the metals company Inc. stock logo
TMC
TMC the metals
+11.8%$0.95$0.85$0.96+1.2%2.32 millionUpcoming Earnings
Gap Up
American Virtual Cloud Technologies, Inc. stock logo
AVCT
American Virtual Cloud Technologies
+11.7%$0.20$0.18$0.18-7.8%25.11 millionShort Interest ↑
Gap Up
High Trading Volume
QNCX
Quince Therapeutics
+11.7%$2.58$2.31$2.37-8.1%865,205Gap Up
Spectrum Pharmaceuticals, Inc. stock logo
SPPI
Spectrum Pharmaceuticals
+11.6%$1.25$1.12$1.21-3.2%3.82 millionNews Coverage
Gap Up
Hut 8 Mining Corp. stock logo
HUT
Hut 8 Mining
+11.4%$3.02$2.71$2.96-2.0%18.12 millionOptions Volume
News Coverage
Gap Up
Alpha and Omega Semiconductor Limited stock logo
AOSL
Alpha and Omega Semiconductor
+11.3%$42.07$37.81$40.81-3.0%1.28 millionEarnings Report
Analyst Report
Short Interest ↓
News Coverage
Gap Up
High Trading Volume
Vivos Therapeutics, Inc. stock logo
VVOS
Vivos Therapeutics
+11.3%$1.34$1.20$1.30-2.6%6,752Upcoming Earnings
Short Interest ↑
Gap Up
Qumu Co. stock logo
QUMU
Qumu
+11.3%$0.89$0.80$0.84-5.9%145,982Earnings Report
Analyst Report
News Coverage
Gap Up
High Trading Volume
Leju Holdings Limited stock logo
LEJU
Leju
+11.2%$2.38$2.14$2.51+5.5%15,104Analyst Report
Gap Up
MoneyLion Inc. stock logo
ML
MoneyLion
+11.1%$2.50$2.25$2.04-18.4%2.62 millionNews Coverage
Gap Up
High Trading Volume
Docebo Inc. stock logo
DCBO
Docebo
+11.0%$39.62$35.68$36.64-7.5%123,571Short Interest ↑
Gap Up
Lucira Health, Inc. stock logo
LHDX
Lucira Health
+10.9%$3.36$3.03$3.19-5.1%30,113Upcoming Earnings
Short Interest ↑
Gap Up
Novonix Limited stock logo
NVX
Novonix
+10.6%$9.67$8.74$9.44-2.4%32,243Short Interest ↓
News Coverage
Gap Up
Canada Goose Holdings Inc. stock logo
GOOS
Canada Goose
+10.6%$23.97$21.68$22.07-7.9%3.64 millionShort Interest ↓
News Coverage
Gap Up
High Trading Volume
HLBZ
Helbiz
+10.1%$1.63$1.48$1.43-12.3%21.34 millionUpcoming Earnings
Short Interest ↓
News Coverage
Positive News
Gap Up
High Trading Volume
Fuel Tech, Inc. stock logo
FTEK
Fuel Tech
+10.1%$1.53$1.39$1.38-9.8%157,675Short Interest ↓
Gap Up
Velodyne Lidar, Inc. stock logo
VLDR
Velodyne Lidar
+10.1%$1.75$1.59$1.65-5.7%34.33 millionEarnings Report
Gap Up
High Trading Volume
DDL
Dingdong (Cayman)
+10.0%$4.94$4.49$4.41-10.7%2.13 millionShort Interest ↑
News Coverage
Gap Up
Jaguar Health, Inc. stock logo
JAGX
Jaguar Health
+9.9%$0.30$0.27$0.29-2.7%11.22 millionUpcoming Earnings
Analyst Report
Short Interest ↑
News Coverage
Gap Up
High Trading Volume
SAB Biotherapeutics, Inc. stock logo
SABS
SAB Biotherapeutics
+9.8%$1.23$1.12$1.12-8.9%42,600Analyst Report
News Coverage
Positive News
Gap Up
LYL
Dragon Victory International
+9.8%$1.00$0.91$0.92-8.0%29,258Short Interest ↑
Gap Up
Quanterix Co. stock logo
QTRX
Quanterix
+9.6%$9.38$8.56$10.16+8.3%3.28 millionAnalyst Downgrade
Insider Buying
Analyst Revision
News Coverage
Gap Up
High Trading Volume
Applied Industrial Technologies, Inc. stock logo
AIT
Applied Industrial Technologies
+9.6%$116.18$106.04$118.89+2.3%516,281News Coverage
Gap Up
High Trading Volume
Warby Parker Inc. stock logo
WRBY
Warby Parker
+9.4%$15.51$14.18$16.90+9.0%6.72 millionOptions Volume
News Coverage
Gap Up
High Trading Volume
Smart for Life, Inc. stock logo
SMFL
Smart for Life
+9.3%$0.67$0.61$0.63-5.5%2.08 millionUpcoming Earnings
Lockup Expiration
News Coverage
Positive News
Gap Up
Verona Pharma plc stock logo
VRNA
Verona Pharma
+9.2%$11.90$10.90$11.80-0.8%5.29 millionAnalyst Report
Short Interest ↑
Analyst Revision
News Coverage
Gap Up
High Trading Volume
MDJM Ltd stock logo
MDJH
MDJM
+9.1%$2.27$2.08$2.14-5.7%34,565Short Interest ↓
Positive News
Gap Up
Muscle Maker, Inc. stock logo
GRIL
Muscle Maker
+9.1%$0.48$0.44$0.40-16.4%707,986Upcoming Earnings
Short Interest ↓
News Coverage
Positive News
Gap Up
LBPH
Longboard Pharmaceuticals
+9.0%$4.10$3.76$4.10flat448Short Interest ↑
Analyst Revision
Gap Up
Energous Co. stock logo
WATT
Energous
+9.0%$1.46$1.34$1.36-6.8%1.10 millionEarnings Report
Analyst Report
News Coverage
Gap Up
High Trading Volume
AAMC
Altisource Asset Management
+8.9%$25.71$23.60$19.47-24.3%22,926Upcoming Earnings
Analyst Report
Gap Up
Progenity, Inc. stock logo
PROG
Progenity
+8.9%$1.10$1.01$0.93-15.5%4.74 millionGap Up
Biora Therapeutics, Inc. stock logo
BIOR
Biora Therapeutics
+8.9%$1.10$1.01$0.93-15.5%4.74 millionUpcoming Earnings
Options Volume
News Coverage
Gap Up
Societal CDMO, Inc. stock logo
SCTL
Societal CDMO
+8.9%$1.17$1.07$1.18+1.3%133,877Earnings Report
News Coverage
Gap Up
SunOpta Inc. stock logo
STKL
SunOpta
+8.8%$9.72$8.93$10.73+10.4%4.98 millionNews Coverage
Gap Up
High Trading Volume
STAAR Surgical stock logo
STAA
STAAR Surgical
+8.8%$95.15$87.44$102.03+7.2%1.85 millionEarnings Report
Analyst Report
News Coverage
Gap Up
High Trading Volume
Entrada Therapeutics, Inc. stock logo
TRDA
Entrada Therapeutics
+8.8%$13.72$12.61$12.70-7.4%31,480Short Interest ↓
Positive News
Gap Up
BITF
Bitfarms
+8.7%$1.87$1.72$1.74-7.0%7.07 millionUpcoming Earnings
News Coverage
Gap Up
The Walt Disney Company stock logo
DIS
Walt Disney
+8.7%$122.21$112.43$117.69-3.7%49.94 millionEarnings Report
Analyst Report
Options Volume
Gap Up
High Trading Volume
NextNav Inc. stock logo
NN
NextNav
+8.6%$3.65$3.36$3.39-7.1%584,944News Coverage
Positive News
Gap Up
Aegon stock logo
AEG
Aegon
+8.6%$5.04$4.64$5.03-0.2%4.87 millionShort Interest ↑
News Coverage
Gap Up
Associated Capital Group, Inc. stock logo
AC
Associated Capital Group
+8.5%$44.50$41.00$40.46-9.1%4,159News Coverage
Gap Up
Sonim Technologies, Inc. stock logo
SONM
Sonim Technologies
+8.5%$0.79$0.73$0.75-4.8%604,735Upcoming Earnings
Insider Buying
Short Interest ↓
Positive News
Gap Up
Auddia Inc. stock logo
AUUD
Auddia
+8.4%$1.09$1.01$1.07-1.8%27,751Short Interest ↓
Positive News
Gap Up
Blackboxstocks Inc. stock logo
BLBX
Blackboxstocks
+8.4%$1.48$1.37$1.32-10.8%31,064Short Interest ↓
Positive News
Gap Up
GLUE
Monte Rosa Therapeutics
+8.4%$9.44$8.71$9.16-3.0%481,404News Coverage
Positive News
Gap Up
Sangoma Technologies Co. stock logo
SANG
Sangoma Technologies
+8.3%$9.00$8.31$9.18+2.0%978Short Interest ↓
Gap Up
Marathon Digital Holdings, Inc. stock logo
MARA
Marathon Digital
+8.3%$17.72$16.36$17.19-3.0%29.78 millionAnalyst Report
Analyst Revision
Gap Up
High Trading Volume
Utz Brands, Inc. stock logo
UTZ
Utz Brands
+8.2%$19.74$18.25$17.71-10.3%1.54 millionNews Coverage
Gap Up
High Trading Volume
Oriental Culture Holding LTD stock logo
OCG
Oriental Culture
+8.0%$2.16$2.00$2.09-3.2%30,777Gap Up
Semrush Holdings, Inc. stock logo
SEMR
Semrush
+8.0%$15.00$13.89$13.35-11.0%303,984Analyst Report
Insider Selling
Gap Up
MaxCyte, Inc. stock logo
MXCT
MaxCyte
+7.9%$6.13$5.68$5.77-5.9%771,437News Coverage
Positive News
Gap Up
Bakkt Holdings, Inc. stock logo
BKKT
Bakkt
+7.9%$3.41$3.16$3.27-4.1%6.14 millionNews Coverage
Gap Up
Super League Gaming, Inc. stock logo
SLGG
Super League Gaming
+7.8%$1.10$1.02$1.11+0.9%611,181Gap Up
High Trading Volume
Accuray Incorporated stock logo
ARAY
Accuray
+7.8%$2.35$2.18$2.64+12.3%1.63 millionEarnings Report
Analyst Upgrade
News Coverage
Gap Up
Cipher Mining Inc. stock logo
CIFR
Cipher Mining
+7.8%$2.50$2.32$2.27-9.2%244,489Gap Up
Alset EHome International Inc. stock logo
AEI
Alset EHome International
+7.7%$0.37$0.34$0.36-4.0%618,529Upcoming Earnings
Short Interest ↑
Gap Up
Sunworks, Inc. stock logo
SUNW
Sunworks
+7.7%$4.13$3.83$3.60-12.7%5.66 millionShort Interest ↓
News Coverage
Gap Up
High Trading Volume
Bit Digital, Inc. stock logo
BTBT
Bit Digital
+7.7%$1.82$1.69$1.75-3.8%5.19 millionNews Coverage
Gap Up
Park City Group, Inc. stock logo
PCYG
Park City Group
+7.7%$5.89$5.47$5.68-3.6%33,264Analyst Report
Short Interest ↓
News Coverage
Gap Up
Code Chain New Continent Limited stock logo
CCNC
Code Chain New Continent
+7.6%$0.36$0.33$0.33-7.3%336,290Positive News
Gap Up
High Trading Volume
The Real Good Food Company, Inc. stock logo
RGF
Real Good Food
+7.5%$7.56$7.03$6.92-8.5%11,964Upcoming Earnings
Gap Up
Bragg Gaming Group Inc. stock logo
BRAG
Bragg Gaming Group
+7.5%$6.45$6.00$5.97-7.4%7,486Short Interest ↓
Analyst Revision
News Coverage
Gap Up
IDW Media Holdings, Inc. stock logo
IDW
IDW Media
+7.5%$2.01$1.87$1.82-9.5%37,500News Coverage
Gap Up
Oyster Point Pharma, Inc. stock logo
OYST
Oyster Point Pharma
+7.4%$8.25$7.68$7.96-3.5%214,262Analyst Report
News Coverage
Gap Up
Foresight Autonomous Holdings Ltd. stock logo
FRSX
Foresight Autonomous
+7.4%$0.78$0.73$0.82+4.6%665,780Short Interest ↑
Gap Up
ATIF Holdings Limited stock logo
ATIF
ATIF
+7.3%$2.05$1.91$1.96-4.4%20,307Short Interest ↑
News Coverage
Gap Up
Viracta Therapeutics, Inc. stock logo
VIRX
Viracta Therapeutics
+7.3%$3.96$3.69$4.03+1.8%83,448News Coverage
Positive News
Gap Up
Orbital Energy Group, Inc. stock logo
OIG
Orbital Energy Group
+7.3%$1.01$0.94$0.95-5.9%4.23 millionGap Up
High Trading Volume
How Investors Can Identify and Successfully Trade Gap-Up Stocks

Trading gap-up stocks can be a profitable strategy for active, risk-tolerant investors

A gap-up stock is one that opens trading at a higher level than the previous day’s closing price. This is often signified by a sharp move with no other trading occurring before or after the gap. Investors can identify gap-up stocks during after-hours and pre-market trading. Reasons why a sock may gap up include the release of news about the stock, such as a favorable earnings report or some sort of geo-political event that may incite speculators to bid up the price of the stock.

A gap-up stock represents a significant stock trading opportunity. However, it requires the discipline to follow the trend and setting trailing stops that allow investors to exit the trade when the direction of the stock no longer supports that trend.

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

Why Are Gap-Up Stocks Important?

A stock that is gapping up indicates a large volume of buyers. However, what’s harder to tell is whether the gapping action is short lived or whether it will continue to become a trend. Investors who want to trade gap-up stocks can easily find them by using a stock screener. Once you identify a potential gap-up stock to trade, you should carefully study the longer term charts of the stock to see if there are clearly defined areas of support and resistance.

If you’re new to gap trading, it is important to look at stocks that are trading with a high volume (a good average volume is above 500,000 shares a day). A gap up stock is clearly represented in a candlestick pattern. A candlestick is a technical indicator that shows the opening and closing price of a stock for a specific period. The color and composition of the candlestick provide information about a stock’s direction and momentum.

How Can Investors Interpret the Significance of a Stock that is Gapping Up?

The gap in a gap-up stock is either a “full gap” or “partial gap”.

  • A full gap occurs when a stock opens at a higher level than the previous session’s high.
  • A partial gap occurs when a stock opens above the previous day’s closing price.

Here’s an example that illustrates the difference between a full gap and a partial gap. During the trading day, the stock of Company ABC closes at $39. However, during the day the stock was trading as high as $41. At the opening bell the next day, the stock opens at $42.50. That stock would be opening higher than both its previous close ($39) and its previous daily high ($41). This would indicate a full gap. However, if the same stock opens at $40, it will only show a partial gap. While closing above its previous closing price of $39, it did not “gap up” above the previous session’s high price of $41.

 The importance of understanding the difference between a full gap and a partial gap is about supply and demand which highlights the difference in risk and potential gain. In general, full gap stocks provide a better opportunity for profit over several days.

For example, a full gap means there is usually sufficient desire to buy or sell the stock. This increased demand will be a signal to market makers that there has to be a significant price change to accommodate any orders that have to be filled. With a partial gap, demand might be such that only a small price increase above the closing price will allow buy or sell orders to be filled.

Beyond the terms full gap and partial gap, gaps generally fall into one of four categories:

  • Breakaway Gaps – These are gaps that take place at the end of a pricing pattern and signal the start of a new trend. Breakaway gaps will coincide with high volume.
  • Exhaustion Gaps – These are gaps that take place 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.
  • Common Gaps – These are gaps that cannot be placed in a price pattern. These simply represent an area where the price has gapped.
  • Continuation Gaps – These 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.

It is common for gaps to get filled in naturally. This means the stock price will move back to its original level. Because of the volatility around earnings season, this is typically a time when stocks will make large price movements.

In some cases, investors (usually individual investors) may be overly enthusiastic about a stock. In almost every case, this will result in a correction. Another reason may be due to a lack of support and resistance. Support and resistance lines are technical indicators that traders can use to set price targets. When a stock gaps up, it usually doesn’t leave behind a support or resistance line to anchor that price level. Finally, the type of price pattern can indicate whether a gap will be filled. For example, exhaustion gaps come at the end of a price pattern, making them more likely to be filled. Breakaway and continuation gaps, which are confirming the direction of a trend, are less likely to be filled.

When gaps get filled within the same trading day as they occur, the gap is said to have undergone fading. This is common during times such as earnings season.

What are Some Effective Trading Strategies for 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, investors can trade gaps successfully (and profitably). Here are some guidelines that can help you stay away from poor gap-up stock trades.

  • If the gap of a stock 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 are trading. An exhaustion gap and 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 hand of institutional investors who may support the trend in order to boost their portfolios.
  • The volume should be consistent with the kind of gap you are trading.

Once you are familiar with the mechanics of gaps and understanding 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 for you to help minimize that risk.

For each gap up strategy, there is a short and a long trading signal. Most gap trading occurs one hour after the market opens to allow time for the stock price to settle into a range. No matter what strategy is being used, it is important 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 on 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 as opposed to full gap stocks.

Here are the most common trading strategies for gap-up stocks. These will occur one hour after the market open (typically 10:30 A.M. EST). The same strategy is applied to either full gap or partial gap positions. These strategies also work for after-hours or pre-market trading.

  • Long Position (Buy): Set a long trailing stop at two ticks (defined by the bid/ask spread) above whatever the high stock price was in the first hour of trading after the market open. The bid/ask spread is usually either one-eight or one-quarter point.
  • Short Position (Sell): Set a long trailing stop at two ticks below the lowest stock price reached in the first hour of trading.

What is the Modified Trading Method?

The Modified Trading Method is an advanced version of the two strategies shown above. This method can apply to either the long or short position. The difference in this method is that instead of requiring a trader to wait until the price breaks above the high (long) or below the low (short), they trade in the middle of a price rebound. This strategy is only used on a stock that has been trading on at least 2X its average volume over the previous five days.

  • Modified Trading Method Long Position (Buy): Set a long stop that is equal to the average of the open price and the high price that was set in the first hour of trading.
  • Modified Trading Method Short Position (Sell): Set a long stop that is equal to the average of the open price and the low price that was set in the first hour of trading.

Do Gap Trading Strategies Work?

Many investors engage in momentum trading. To these investors “trading the gap” (also called “gapping”) is not logical. After all, what goes up must come down – and usually hard. So if a stock gaps up, it’s due for a correction?

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

For example, in a bullish market, a stock that is showing strong fundamentals may gap up after a strong earnings report. When institutional investors learn about the bullish report, they may drive the price even higher. If traders stay away from the stock believing that momentum is working against them, they may miss out on significant gains.

The Bottom Line on Gap-Up Stocks

One of the easiest ways to trade stocks, especially if you are looking to become a day trader is to look for gap-up stocks. Gap-up stocks are stocks that show significant price movement after the stock market closes for the day.

Investors can find gap-up stocks at any time. However, they are particularly common during earnings season when top line and/or EPS numbers that beat analysts’ expectations can cause a stock to surge. Today’s online stock screeners give investors an easy way for traders to identify and track gap-up stocks.

Trading gap-up stocks requires a disciplined system that requires traders to use trailing stops at well-defined entry and exit points to limit loss and protect profits. Not every gap stop is ideal for trading. Investors need to pay attention to other technical indicators such as trading volume to decide whether or not a stock may produce a profitable trade.


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