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Open in appA gap up or gap down is the difference between a stock's previous close and its next opening price. A gap up usually follows positive results, news or sentiment, while a gap down often follows negative news, weak results or wider market fear.
This lesson explains why gaps create short-term opportunities and three common approaches: fading an overextended gap back towards the prior close, trading in the direction of the gap when volume and price action confirm it, and the gap fill idea that price may return to the previous close.
What you’ll learn
✓What gap up and gap down openings are
✓Common causes of price gaps
✓Fading the gap
✓Riding momentum in the direction of the gap
✓The gap fill approach
Read and practise
SPEAKERDharmendra RajbharTrainer
PGDM in finance, having 5+ experience in Equity, commodities , forex analysis and trading.
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