Gap Trading in Stocks — Do Gaps Really Fill? What Happens After a Gap Up or Gap Down, and Where to Put Your Stop

Everyone says a gap will fill. Will yours?

Some of what you were taught holds up. Some of it does not. The book shows you which is which, and by how much.

Your stock opens well above yesterday's high, or far below yesterday's low. Now what? Will it come back and fill the gap, and how long can you afford to wait? Is a small gap the same trade as a big one? Are breakaway, runaway, exhaustion, and island gaps real signals, or only labels? Where does your stop go so a normal first week doesn't take you out?

Most gap traders answer these from rules of thumb that nearly every trading book repeats. Almost no one checks them. This book wrote the rules down as exact definitions and counted what price did next after 95,248 gaps up and down in American stocks, across more than nine million stock days, including companies that were later dropped or failed. Where the counts find nothing, it says so plainly.

A primer teaches each idea first for readers new to gaps, and Technical Notes explain how every count was made. It covers daily charts of stocks. It doesn't teach opening-bell day trading, and it doesn't promise an edge it didn't find.

What this book will help you do

Stop waiting on fills that may never come, by knowing what sets your expectation before you place the trade
Stop being shaken out in the first week, by knowing how much room a stop needs after a gap, and why
Know which gap names to ignore, and what the names do and don't tell you
Read a gap through an old high or low, and which breaks deserve more of your trust
Size every trade to its stop, so a wider stop doesn't mean a bigger loss
Run a six-step routine on any gap before you act, using only measurements you can make on the chart

31 charts and diagrams, a primer for readers new to gaps, and Technical Notes on how every count was made.