Gap Fill Strategy

Approximately 70% of all gaps eventually fill. Common gaps have higher fill rates (80%+), while breakaway gaps have lower rates (20-30%). About 50% of gaps fill on the same day.

No. Only trade gaps that pass your filters: no major news, normal volume, 1-3% gap size, and confirmation of reversal. Avoid earnings gaps, high-volume gaps, and breakaway gaps.

The first 15-30 minutes have highest volatility and widest spreads. Waiting allows price to stabilize, reduces slippage, and provides confirmation that the gap will likely fill.

True gap: Open is beyond previous day's high (gap up) or low (gap down), creating empty space on chart. Partial gap: Open is different from close but within previous range - less significant.

Common stops: Below the gap low (for gap down buys) or 1.5× the gap size below your entry. Example: 1% gap down, stop 1.5% below entry protects against gap extension.

Common: No news + low volume + within range. Breakaway: Major news + high volume + breaks key level. Runaway: Mid-trend + continues direction. Exhaustion: End of trend + reverses after.

Wait 15-30 minutes to form a range. For gap down: buy when price breaks above range high. For gap up: short when price breaks below range low. Provides confirmation before entry.

In bull markets, gap downs fill more often (buy the dip). In bear markets, gap ups fill more often (sell the rally). In ranging markets, both directions fill well. Trade with market tendency.

Instead of targeting 100% gap fill (previous close), target 50% or 75% fill. Higher win rate but smaller profits. Useful for larger gaps that may not fully fill.

Gap down landing on support, MA, or Fibonacci level = higher fill probability. Gap up hitting resistance = higher fill probability. Confluence adds confidence to the trade.

Market makers have inventory from gap moves. To reduce risk, they may support price on gap downs (long inventory) or pressure on gap ups (short inventory). This order flow contributes to gap fills.

Systematic scoring based on factors: +20 no news, +15 low volume, +15 against trend, +15 at S/R, +10 small size, +10 reversal candle, -20 high volume, -15 with trend, -30 earnings. Score >50 = trade.

Gap down: Buy calls or sell bull put spreads. Gap up: Buy puts or sell bear call spreads. Benefits: defined risk, leverage. Consider elevated IV on gap days and time decay for short-term options.

3-5 maximum to maintain focus and risk control. Diversify across sectors. Total gap trade exposure shouldn't exceed 10% of portfolio. Quality over quantity.

Fill rate by gap type, average fill time, win rate by market condition, P&L by gap size, maximum adverse excursion. Segment by gap type, size, and market condition for insights.