Gap Trading
A strategy that trades stocks which open significantly higher or lower than the previous close, creating a visible "gap" on the chart.
Explained Simply
A gap occurs when a stock opens at a different price than where it closed, leaving empty space on the chart. Gap ups happen when overnight news (earnings, upgrades, macro events) drives demand higher before the open. Gap downs happen from bad news. Traders use gap strategies in two ways: "gap and go" (trading in the gap direction, expecting momentum continuation) and "gap fill" (betting the stock reverses to fill the gap). Studies show that gaps often fill within a few days, but strong momentum gaps (on high volume with a catalyst) tend to continue rather than fill.
How Tradewink Uses Gap Trading
Tradewink's DayTradeScreener identifies pre-market gappers every morning using real-time data. Stocks gapping 2%+ on above-average volume are scored for setup quality. The AI evaluates whether the gap has a catalyst (earnings, news) and whether the pre-market action suggests continuation or fill, then generates entry/stop/target levels for the most promising setups.
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See Gap Trading in action
Tradewink uses gap trading as part of its AI trading signal pipeline. Start getting signals that use this concept to find real opportunities.