Gap openings can be both exciting and confusing. The market opens much higher or lower than the previous day’s close, and many traders don’t know what to do.
But if you understand the price behaviour behind gaps, you can trade them with confidence.
Let me share 3 proven strategies to trade gap openings the right way:
🔹 Strategy 1: Gap Fill Strategy
This is a simple and powerful idea.
When the market opens with a gap and comes back to fill the previous price level, that’s called a gap fill.
For example:
If a stock closed at ₹100 yesterday and today it opens at ₹90 (gap down), but then starts moving back up towards ₹100 — that is a gap fill.
In this case, you can plan a long entry (buy) when the price moves toward the gap area, and aim for a target near the previous close. Always set a stop-loss to protect your capital.
🔹 Strategy 2: Gap and Breakout Continuation
Sometimes, a gap is a sign of strong momentum in the same direction.
For example, the stock gaps up and keeps moving up with strong bullish candles.
Don’t rush in! Wait for a proper candle to close and confirm the breakout.
Once the breakout is confirmed, you can enter the trade in the direction of the gap.
This works well when there is good volume and market support.
🔹 Strategy 3: Reversal Signal After Gap
Not all gaps are meant to continue.
Sometimes, the price opens with a big gap and then immediately shows signs of reversal.
Look for strong reversal candles like:
Bearish Engulfing after a gap up
Bullish Engulfing after a gap down
This tells you the market might reverse direction.
But be careful — use a tight stop-loss and trade only after confirmation.
🧠 Final Thought
Gap openings can offer high probability trades — if you know what to look for.
Just don’t guess. Let the chart speak.
Gap Fill? Trade the return to the previous price.
Breakout? Trade after confirmation.
Reversal? Trade the signal, but with tight risk control.
Which gap strategy do you use the most — Fill, Breakout, or Reversal?
Let me know in the comments.
And for more real-world strategies like these, follow the Mindful Trading Hub on YouTube and stay connected!
Share this post