Gap Trading Practice
A gap is an empty space on the chart where price jumped without trading. Different gaps tell different stories. Train to read the context instead of assuming every gap fills.
A gap forms when a candle opens well above or below the previous close. A breakaway gap launches a new move out of a base; a runaway gap appears mid-trend on strength; an exhaustion gap comes late and often marks the end. Many gaps "fill" as price returns to the prior close — but not all, and not always soon.
How to spot it
- ✓ Locate the empty space between one close and the next open.
- ✓ Classify it by location: breakaway (from a base), runaway (mid-trend) or exhaustion (late).
- ✓ Strong volume supports a breakaway or runaway gap.
- ✓ Exhaustion gaps after a long move are more likely to reverse and fill.
- ✓ Use the prior close and gap edge as reference levels.
⚠️ Common mistake
Blindly fading every gap expecting it to fill. Breakaway and runaway gaps frequently keep going; betting on a fill into strength is a fast way to get run over.
FAQ
Do all gaps fill?
No. Many do eventually, but breakaway and runaway gaps can stay open for a long time or never fill. Location and volume decide the odds. This page is practice, not advice.
Why do gaps happen?
They form when strong news or order imbalance moves price between sessions, so it opens away from the prior close with no trades in between.