Few topics generate more debate among traders than price gaps.
Do all gaps eventually get filled? Should you trade in the direction of the gap... or fade it? Are breakaway gaps different from exhaustion gaps?
In today's episode, I answer a viewer question about one of the most misunderstood concepts in technical analysis and share my personal approach after nearly 30 years of trading the financial markets.
We'll break down:
- What causes price gaps
- The different types of gaps every trader should know
- Which gaps are most likely to fill—and which often don't
- How I evaluate gaps before entering a trade
- Common mistakes traders make when trading gap openings
The reality is that there isn't a single "correct" way to trade gaps. Different strategies work in different market environments, and understanding the context is often far more important than the gap itself.
Because a gap isn't a trading signal...
It's simply new information that needs to be interpreted correctly.
We'll also review today's market action, discussing the biggest movers, sector performance, and how today's trading may be setting up opportunities for tomorrow's session.
As always, I'll walk through what I'm watching, the key technical levels on my radar, and the setups that have my attention heading into the next trading day.
Listen now:
👉 Trading Gaps
Inside the episode:
- The different types of market gaps
- My approach to trading gap openings
- When gaps are likely to fill—and when they're not
- Today's market recap
- Potential trading setups for tomorrow
Whether you're a day trader, swing trader, or long-term investor, understanding market gaps can help you make better trading decisions.
Hit Like, Subscribe, and send in your questions for the next TraderMerlin show!
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Trading Applications used:
- Tradingview
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