Seeing all these amazing gaps today, it made me think there must be some mileage in trading them.......the rules state all gaps are eventually filled.........although I'm sure there must be exceptions to that rule.
What is a Gap?
A gap is a change in price levels between the close and open of two consecutive days. Although most technical analysis manuals define the four types of gap patterns as Common, Breakaway, Continuation and Exhaustion, those labels are applied after the chart pattern is established. That is, the difference between any one type of gap from another is only distinguishable after the stock continues up or down in some fashion. Although those classifications are useful for a longer-term understanding of how a particular instrument reacts, they offer little guidance for trading.
So now we need to define some rules to trade the gaps.
Any ideas or thoughts?
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