A candlestick is a technical indicator that shows the opening and closing price of a stock for a specific period. A gap up stock is clearly represented in a candlestick pattern. If you’re new to gap trading, it is important to look at stocks that are trading with a high volume (a good average volume is above 500,000 shares a day). Once you identify a potential gap-up stock to trade, you should carefully study the longer term charts of the stock to see if there are clearly defined areas of support and resistance. Investors who want to trade gap-up stocks can easily find them by using a stock screener. However, what’s harder to tell is whether the gapping action is short lived or whether it will continue to become a trend. Why Are Gap-Up Stocks Important?Ī stock that is gapping up indicates a large volume of buyers. We’ll also go over the most common gap trading strategies.
#FILL THE GAP STOCKS HOW TO#
We’ll also provide an overview of gaps so that you can understand how to interpret a stock chart. In this article we’ll break down gap-up stocks by defining what they are and how you can identify them. However, it requires the discipline to follow the trend and setting trailing stops that allow investors to exit the trade when the direction of the stock no longer supports that trend. Reasons why a sock may gap up include the release of news about the stock, such as a favorable earnings report or some sort of geo-political event that may incite speculators to bid up the price of the stock.Ī gap-up stock represents a significant stock trading opportunity. Investors can identify gap-up stocks during after-hours and pre-market trading. This is often signified by a sharp move with no other trading occurring before or after the gap. Trading gap-up stocks can be a profitable strategy for active, risk-tolerant investorsĪ gap-up stock is one that opens trading at a higher level than the previous day’s closing price.
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