S&P 500   4,247.08 (-0.62%)
DOW   33,362.47 (-0.76%)
QQQ   351.91 (-0.65%)
AAPL   169.54 (-1.41%)
MSFT   310.14 (-0.64%)
META   292.47 (-2.17%)
GOOGL   129.16 (+0.46%)
AMZN   125.37 (-0.48%)
TSLA   236.13 (-3.27%)
NVDA   418.00 (-0.26%)
NIO   8.35 (-0.71%)
BABA   85.63 (-0.33%)
AMD   97.00 (+1.08%)
T   14.81 (-1.40%)
F   12.28 (-1.21%)
MU   67.07 (-1.28%)
CGC   0.86 (-7.06%)
GE   110.42 (+0.45%)
DIS   79.32 (-0.91%)
AMC   7.65 (-3.29%)
PFE   31.98 (-1.30%)
PYPL   56.77 (-3.67%)
NFLX   376.94 (-0.61%)
S&P 500   4,247.08 (-0.62%)
DOW   33,362.47 (-0.76%)
QQQ   351.91 (-0.65%)
AAPL   169.54 (-1.41%)
MSFT   310.14 (-0.64%)
META   292.47 (-2.17%)
GOOGL   129.16 (+0.46%)
AMZN   125.37 (-0.48%)
TSLA   236.13 (-3.27%)
NVDA   418.00 (-0.26%)
NIO   8.35 (-0.71%)
BABA   85.63 (-0.33%)
AMD   97.00 (+1.08%)
T   14.81 (-1.40%)
F   12.28 (-1.21%)
MU   67.07 (-1.28%)
CGC   0.86 (-7.06%)
GE   110.42 (+0.45%)
DIS   79.32 (-0.91%)
AMC   7.65 (-3.29%)
PFE   31.98 (-1.30%)
PYPL   56.77 (-3.67%)
NFLX   376.94 (-0.61%)
S&P 500   4,247.08 (-0.62%)
DOW   33,362.47 (-0.76%)
QQQ   351.91 (-0.65%)
AAPL   169.54 (-1.41%)
MSFT   310.14 (-0.64%)
META   292.47 (-2.17%)
GOOGL   129.16 (+0.46%)
AMZN   125.37 (-0.48%)
TSLA   236.13 (-3.27%)
NVDA   418.00 (-0.26%)
NIO   8.35 (-0.71%)
BABA   85.63 (-0.33%)
AMD   97.00 (+1.08%)
T   14.81 (-1.40%)
F   12.28 (-1.21%)
MU   67.07 (-1.28%)
CGC   0.86 (-7.06%)
GE   110.42 (+0.45%)
DIS   79.32 (-0.91%)
AMC   7.65 (-3.29%)
PFE   31.98 (-1.30%)
PYPL   56.77 (-3.67%)
NFLX   376.94 (-0.61%)
S&P 500   4,247.08 (-0.62%)
DOW   33,362.47 (-0.76%)
QQQ   351.91 (-0.65%)
AAPL   169.54 (-1.41%)
MSFT   310.14 (-0.64%)
META   292.47 (-2.17%)
GOOGL   129.16 (+0.46%)
AMZN   125.37 (-0.48%)
TSLA   236.13 (-3.27%)
NVDA   418.00 (-0.26%)
NIO   8.35 (-0.71%)
BABA   85.63 (-0.33%)
AMD   97.00 (+1.08%)
T   14.81 (-1.40%)
F   12.28 (-1.21%)
MU   67.07 (-1.28%)
CGC   0.86 (-7.06%)
GE   110.42 (+0.45%)
DIS   79.32 (-0.91%)
AMC   7.65 (-3.29%)
PFE   31.98 (-1.30%)
PYPL   56.77 (-3.67%)
NFLX   376.94 (-0.61%)

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)
ShiftPixy, Inc. stock logo
PIXY
ShiftPixy
+203.4%$1.32$0.44$0.84-36.4%122.84 millionShort Interest ↑
News Coverage
Gap Up
Trading Halted
High Trading Volume
American Strategic Investment Co. stock logo
NYC
American Strategic Investment
+42.8%$8.88$6.22$7.72-13.1%1.08 millionShort Interest ↓
Gap Up
High Trading Volume
Alpha Teknova, Inc. stock logo
TKNO
Alpha Teknova
+31.8%$3.85$2.92$2.79-27.5%3.19 millionShort Interest ↑
News Coverage
Positive News
Gap Up
High Trading Volume
MSP Recovery, Inc. stock logo
LIFW
MSP Recovery
+29.8%$0.20$0.15$0.22+9.3%121.56 millionShort Interest ↓
Gap Up
High Trading Volume
Galecto, Inc. stock logo
GLTO
Galecto
+27.5%$0.73$0.57$0.66-9.9%9.43 millionShort Interest ↑
News Coverage
Positive News
Gap Up
High Trading Volume
MillerKnoll, Inc. stock logo
MLKN
MillerKnoll
+23.9%$23.72$19.15$24.43+3.0%5.83 millionEarnings Report
Analyst Report
Options Volume
News Coverage
Gap Up
High Trading Volume
Phoenix New Media Limited stock logo
FENG
Phoenix New Media
+20.5%$1.35$1.12$1.26-6.7%139,883Analyst Report
Short Interest ↓
Gap Up
High Trading Volume
Cardiff Oncology, Inc. stock logo
CRDF
Cardiff Oncology
+17.9%$1.91$1.62$1.63-14.9%20.70 millionShort Interest ↑
News Coverage
Gap Up
High Trading Volume
Biohaven Ltd. stock logo
BHVN
Biohaven
+17.8%$20.80$17.65$22.72+9.2%4.99 millionGap Up
High Trading Volume
Volcon, Inc. stock logo
VLCN
Volcon
+14.6%$0.44$0.38$0.43-2.3%30,391Positive News
Gap Up
Gravitas Education Holdings, Inc. stock logo
GEHI
Gravitas Education
+14.1%$19.97$17.50$24.09+20.6%6,795Short Interest ↑
Positive News
High Trading Volume
Exagen Inc. stock logo
XGN
Exagen
+13.4%$2.70$2.38$2.65-1.9%18,229Analyst Report
Short Interest ↑
News Coverage
Gap Up
Ginkgo Bioworks Holdings, Inc. stock logo
DNA
Ginkgo Bioworks
+12.1%$1.94$1.73$1.78-8.5%31.59 millionShort Interest ↑
Greenwave Technology Solutions, Inc. stock logo
GWAV
Greenwave Technology Solutions
+11.5%$0.69$0.62$0.71+2.2%615,781Short Interest ↓
News Coverage
Positive News
Gap Up
High Trading Volume
Jet.AI Inc. stock logo
JTAI
Jet.AI
+11.5%$3.78$3.39$3.26-13.8%250,891Upcoming Earnings
News Coverage
Positive News
Gap Up
High Trading Volume
MTBL
Moatable
+11.2%$1.14$1.03$1.03-9.9%6,123Gap Up
Eledon Pharmaceuticals, Inc. stock logo
ELDN
Eledon Pharmaceuticals
+11.2%$1.39$1.25$1.26-9.4%204,065Analyst Report
Short Interest ↑
News Coverage
Gap Up
High Trading Volume
InnSuites Hospitality Trust stock logo
IHT
InnSuites Hospitality Trust
+10.8%$1.44$1.30$1.36-5.6%12,224Analyst Report
Positive News
Gap Up
Interactive Strength Inc. stock logo
TRNR
Interactive Strength
+10.7%$1.55$1.40$1.37-11.6%170,215Positive News
Gap Up
Renalytix Plc stock logo
RNLX
Renalytix
+10.6%$2.08$1.88$1.88-9.6%42,074Upcoming Earnings
News Coverage
Gap Up
Xos, Inc. stock logo
XOS
XOS
+10.0%$0.35$0.32$0.32-8.4%95,465Positive News
Gap Up
SoundHound AI, Inc. stock logo
SOUN
SoundHound AI
+10.0%$1.76$1.60$1.78+1.1%17.07 millionAnalyst Report
Gap Up
Lifezone Metals Limited stock logo
LZM
Lifezone Metals
+9.6%$17.07$15.57$14.21-16.8%75,031Positive News
Gap Up
Cyclo Therapeutics, Inc. stock logo
CYTH
Cyclo Therapeutics
+9.6%$1.60$1.46$1.52-5.0%54,078Analyst Upgrade
Short Interest ↓
Positive News
Gap Up
Canopy Growth Co. stock logo
CGC
Canopy Growth
+9.5%$1.01$0.92$0.86-15.1%88.03 millionShort Interest ↑
Gap Up
High Trading Volume
Spruce Power Holding Co. stock logo
SPRU
Spruce Power
+9.0%$0.73$0.67$0.68-7.4%43,576Gap Up
Blink Charging Co. stock logo
BLNK
Blink Charging
+8.9%$3.19$2.93$3.09-3.1%3.58 millionAnalyst Report
Short Interest ↑
News Coverage
Gap Up
VBI Vaccines Inc. stock logo
VBIV
VBI Vaccines
+8.6%$0.68$0.63$0.70+2.2%1.72 millionShort Interest ↑
Gap Up
High Trading Volume
Cheetah Net Supply Chain Service Inc. stock logo
CTNT
Cheetah Net Supply Chain Service
+8.4%$1.94$1.79$2.00+3.1%23,453Gap Up
Allakos Inc. stock logo
ALLK
Allakos
+8.3%$2.34$2.16$2.51+7.3%1.41 millionAnalyst Report
News Coverage
Positive News
Gap Up
Brainstorm Cell Therapeutics Inc. stock logo
BCLI
Brainstorm Cell Therapeutics
+8.3%$0.42$0.39$0.42flat28,762Short Interest ↑
News Coverage
Gap Up
Trading Halted
Telos Co. stock logo
TLS
Telos
+8.2%$2.10$1.94$2.11+0.5%353,381Analyst Upgrade
Positive News
Gap Up
Burning Rock Biotech Limited stock logo
BNR
Burning Rock Biotech
+8.2%$0.99$0.92$0.96-2.7%26,013Short Interest ↑
Gap Up
Hayward Holdings, Inc. stock logo
HAYW
Hayward
+8.1%$14.50$13.41$14.50flat5.73 millionGap Up
High Trading Volume
AIB
AIB Acquisition
+8.1%$12.08$11.18$11.95-1.1%1,956Positive News
Gap Up
Atreca, Inc. stock logo
BCEL
Atreca
+7.7%$0.28$0.26$0.28-0.7%79,833Positive News
Gap Up
Banco Bradesco S.A. stock logo
BBDO
Banco Bradesco
+7.7%$2.53$2.35$2.42-4.3%30,672Gap Up
Xilio Therapeutics, Inc. stock logo
XLO
Xilio Therapeutics
+7.7%$2.39$2.22$2.18-8.8%6,562Short Interest ↓
News Coverage
Positive News
Gap Up
Chijet Motor Company, Inc. stock logo
CJET
Chijet Motor
+7.7%$2.11$1.96$1.95-7.6%59,212News Coverage
Gap Up
Ekso Bionics Holdings, Inc. stock logo
EKSO
Ekso Bionics
+7.6%$0.74$0.69$0.73-1.4%31,790Short Interest ↑
News Coverage
Gap Up
SRM Entertainment, Inc. stock logo
SRM
SRM Entertainment
+7.5%$2.28$2.12$2.18-4.4%29,144Quiet Period Expiration
Gap Up
S&W Seed stock logo
SANW
S&W Seed
+7.5%$0.86$0.80$0.84-2.3%28,923Short Interest ↓
News Coverage
Gap Up
Cipher Mining Inc. stock logo
CIFR
Cipher Mining
+7.5%$2.45$2.28$2.31-5.7%322,138Analyst Report
Gap Up
Republic First Bancorp, Inc. stock logo
FRBK
Republic First Bancorp
+7.1%$0.30$0.28$0.18-41.7%18,292Analyst Report
Gap Up
Fathom Holdings Inc. stock logo
FTHM
Fathom
+7.1%$4.55$4.25$4.22-7.3%6,347Short Interest ↑
Positive News
Gap Up
Oriental Culture Holding LTD stock logo
OCG
Oriental Culture
+6.9%$0.70$0.65$0.70flat2,853News Coverage
Gap Up
NuCana plc stock logo
NCNA
NuCana
+6.9%$0.62$0.58$0.60-3.2%18,414Positive News
Gap Up
CURO Group Holdings Corp. stock logo
CURO
CURO Group
+6.9%$1.09$1.02$1.06-2.7%17,060Gap Up
Marker Therapeutics, Inc. stock logo
MRKR
Marker Therapeutics
+6.8%$4.84$4.53$4.71-2.7%17,279Short Interest ↑
Gap Up
Prestige Wealth Inc. stock logo
PWM
Prestige Wealth
+6.8%$3.75$3.51$3.27-12.8%37,997Positive News
Gap Up
Nemaura Medical Inc. stock logo
NMRD
Nemaura Medical
+6.8%$0.38$0.36$0.35-7.0%16,022Short Interest ↑
Positive News
Gap Up
CF Acquisition Corp. VIII stock logo
CFFE
CF Acquisition Corp. VIII
+6.8%$17.51$16.40$16.02-8.5%4,595Gap Up
Envirotech Vehicles, Inc. stock logo
EVTV
Envirotech Vehicles
+6.7%$1.75$1.64$1.66-5.1%5,940Upcoming Earnings
Short Interest ↑
Gap Up
Prenetics Global Limited stock logo
PRE
Prenetics Global
+6.7%$0.48$0.45$0.47-2.2%23,283Analyst Report
Gap Up
NextPlat Corp stock logo
NXPL
NextPlat
+6.6%$1.94$1.82$1.85-4.6%1,958Short Interest ↓
Positive News
Gap Up
Kineta, Inc. stock logo
KA
Kineta
+6.5%$2.62$2.46$2.62flat8,990Short Interest ↑
Gap Up
ProSomnus, Inc. stock logo
OSA
ProSomnus
+6.4%$1.00$0.94$0.96-4.0%16,453Analyst Report
News Coverage
Gap Up
Purple Innovation, Inc. stock logo
PRPL
Purple Innovation
+6.4%$1.67$1.57$1.54-7.8%475,358News Coverage
Positive News
Gap Up
Immunovant, Inc. stock logo
IMVT
Immunovant
+6.4%$42.50$39.96$40.40-4.9%7.85 millionAnalyst Report
News Coverage
Gap Up
High Trading Volume
CXApp Inc. stock logo
CXAI
CXApp
+6.4%$1.59$1.50$1.50-5.7%254,110Short Interest ↑
Positive News
Gap Up
Cloudflare, Inc. stock logo
NET
Cloudflare
+6.3%$60.25$56.68$59.18-1.8%5.29 millionNews Coverage
Gap Up
Broadway Financial Co. stock logo
BYFC
Broadway Financial
+6.2%$1.03$0.97$0.97-5.8%31,267Analyst Report
Short Interest ↑
Gap Up
VYNE Therapeutics Inc. stock logo
VYNE
VYNE Therapeutics
+6.1%$3.82$3.60$4.06+6.3%28,566Positive News
Gap Up
Twist Bioscience Co. stock logo
TWST
Twist Bioscience
+6.1%$21.08$19.87$20.32-3.6%377,261Analyst Report
News Coverage
Gap Up
Meihua International Medical Technologies Co., Ltd. stock logo
MHUA
Meihua International Medical Technologies
+6.1%$1.92$1.81$1.93+0.5%6,449Short Interest ↓
Gap Up
SOS Limited stock logo
SOS
SOS
+6.1%$4.89$4.61$4.10-16.2%187,902Upcoming Earnings
Short Interest ↓
Gap Up
Argo Blockchain plc stock logo
ARBK
Argo Blockchain
+6.1%$1.05$0.99$0.99-5.7%55,279Gap Up
Omega Therapeutics, Inc. stock logo
OMGA
Omega Therapeutics
+6.1%$2.45$2.31$2.14-12.7%150,804News Coverage
Gap Up
Brenmiller Energy Ltd stock logo
BNRG
Brenmiller Energy
+6.0%$0.68$0.64$0.69+1.5%5,599Short Interest ↑
Positive News
Gap Up
Stabilis Solutions, Inc. stock logo
SLNG
Stabilis Solutions
+6.0%$4.45$4.20$4.17-6.3%2,821Short Interest ↓
Positive News
Gap Up
Star Group, L.P. stock logo
SGU
Star Group
+5.9%$13.73$12.96$12.96-5.6%3,383Short Interest ↓
News Coverage
Gap Up
Fuel Tech, Inc. stock logo
FTEK
Fuel Tech
+5.9%$1.06$1.00$1.10+3.8%208,009Gap Up
36Kr Holdings Inc. stock logo
KRKR
36Kr
+5.9%$0.88$0.83$0.82-6.5%1,176Short Interest ↓
Positive News
Gap Up
Ostin Technology Group Co., Ltd. stock logo
OST
Ostin Technology Group
+5.8%$0.72$0.69$0.73+0.9%315,331Positive News
Gap Up
High Trading Volume
Movella Holdings Inc. stock logo
MVLA
Movella
+5.8%$0.61$0.57$0.56-7.7%153,305Positive News
Gap Up
Cue Health Inc. stock logo
HLTH
Cue Health
+5.7%$0.48$0.45$0.47-2.8%56,230Short Interest ↓
Positive News
Gap Up
Alaunos Therapeutics, Inc. stock logo
TCRT
Alaunos Therapeutics
+5.6%$0.15$0.14$0.13-11.9%917,768Positive News
Gap Up
TeraWulf Inc. stock logo
WULF
TeraWulf
+5.6%$1.33$1.26$1.23-7.7%2.71 millionAnalyst Report
News Coverage
Gap Up
Vaccinex, Inc. stock logo
VCNX
Vaccinex
+5.6%$1.33$1.26$1.16-12.8%360,936Stock Split
Short Interest ↓
News Coverage
Gap Up
High Trading Volume
Motorsport Games Inc. stock logo
MSGM
Motorsport Games
+5.5%$3.81$3.61$3.71-2.6%1,160Short Interest ↓
News Coverage
Positive News
Gap Up
WW International, Inc. stock logo
WW
WW International
+5.5%$10.86$10.29$10.92+0.6%4.05 millionAnalyst Report
Gap Up
Yatra Online, Inc. stock logo
YTRA
Yatra Online
+5.5%$2.30$2.18$2.25-2.2%50,508Upcoming Earnings
Gap Up
Enthusiast Gaming Holdings Inc. stock logo
EGLX
Enthusiast Gaming
+5.5%$0.37$0.35$0.38+4.0%110,044Positive News
Gap Up
CaliberCos Inc. stock logo
CWD
CaliberCos
+5.4%$1.36$1.29$1.30-4.4%21,961Positive News
Gap Up
Vivani Medical, Inc. stock logo
VANI
Vivani Medical
+5.3%$1.00$0.95$0.97-3.1%34,981Gap Up
Inozyme Pharma, Inc. stock logo
INZY
Inozyme Pharma
+5.3%$4.73$4.49$4.44-6.1%429,475Analyst Report
Short Interest ↑
News Coverage
Gap Up
Generac Holdings Inc. stock logo
GNRC
Generac
+5.3%$108.68$103.22$108.96+0.3%1.11 millionGap Up
Innate Pharma S.A. stock logo
IPHA
Innate Pharma
+5.2%$2.62$2.49$2.62flat6,335Positive News
Gap Up
Freightos Limited stock logo
CRGO
Freightos
+5.2%$2.42$2.30$2.30-5.0%19,470News Coverage
Gap Up
Phunware, Inc. stock logo
PHUN
Phunware
+5.2%$0.22$0.21$0.20-6.5%795,385News Coverage
Gap Up
Zapp Electric Vehicles Group Limited stock logo
ZAPP
Zapp Electric Vehicles Group
+5.2%$0.94$0.89$0.87-7.3%1,952Gap Up
REV Group, Inc. stock logo
REVG
REV Group
+5.1%$15.95$15.17$16.00+0.3%215,161Analyst Upgrade
Positive News
Gap Up
MidWestOne Financial Group, Inc. stock logo
MOFG
MidWestOne Financial Group
+5.1%$20.32$19.33$20.17-0.7%11,191Analyst Report
Short Interest ↑
News Coverage
Gap Up
Adagene Inc. stock logo
ADAG
Adagene
+5.1%$1.45$1.38$1.50+3.4%14,550Short Interest ↓
Gap Up
MingZhu Logistics Holdings Limited stock logo
YGMZ
MingZhu Logistics
+5.0%$0.45$0.43$0.45+0.7%14,932Positive News
Gap Up
Akili, Inc. stock logo
AKLI
Akili
+5.0%$0.57$0.54$0.56-1.3%15,321Short Interest ↑
Gap Up
Charles & Colvard, Ltd. stock logo
CTHR
Charles & Colvard, Ltd.
+5.0%$0.72$0.69$0.69-4.2%37,357Upcoming Earnings
Short Interest ↑
Gap Up
Janux Therapeutics, Inc. stock logo
JANX
Janux Therapeutics
+4.9%$10.43$9.94$10.04-3.7%10,337Gap Up
China Natural Resources, Inc. stock logo
CHNR
China Natural Resources
+4.9%$1.94$1.85$1.87-3.6%882Gap Up
China Green Agriculture, Inc. stock logo
CGA
China Green Agriculture
+4.9%$2.59$2.47$2.43-6.2%3,536Upcoming Earnings
Gap Up

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

Contributing Author: Energy, Commodities

Claire Shefchik is a freelance writer, content marketer and journalist. A native of the Twin Cities area, she has a BA in creative writing from the University of Arizona and an MFA in fiction writing from Sarah Lawrence College. She never thought she’d launch a career writing about business and investing, but she took a shine to the topics while working as the business editor for a newspaper in one of the offshore finance capitals of the world. Besides writing for MarketBeat, she covers business, travel and lifestyle topics for The Washington Post, Travel + Leisure, Cosmopolitan, and many more publications, and works in content marketing for a variety of clients.
Contact Claire Shefchik via email at shefchikclaire@gmail.com.

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