How to Profit in the Stock Market by Michael Sincere

Author:Michael Sincere
Language: eng
Format: epub
Publisher: McGraw Hill LLC
Published: 2022-05-15T00:00:00+00:00

Common Gaps

The gap that appears most often on a chart is the appropriately named common gap. For example, if there is a gap between the closing and opening prices, the amount is so small that it’s insignificant, maybe only a few pennies. For instance, you look on a chart and notice there is a gap between the $60 close and the opening price of $60.10. Common gaps don’t usually provide trading opportunities.

Now that you have an overall picture of the main gap types, let’s continue our discussion on how to profit from them. As you may have guessed, the breakaway gap is the riskiest because a sudden reversal can be costly. However, if your timing is accurate, it can also bring the most profits.

NOTE: The remainder of this chapter is devoted only to trading the breakaway gap.

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