HomeОбразованиеRelated VideosMore From: Sasha Evdakov: Tradersfly

Understanding Gaps: Common, Breakaway, Runaway, and Exhaustion Gap

686 ratings | 68801 views
What Is a Gap? -When a stock ends the day at a certain level and then starts at a new level even though no trades took place. -Gaps are usually from one day to the next. -The reason is that something within the company or industry can change: earnings report, etc. -Weekly charts can also have gaps, but that usually happens over the weekend and it isn't as common. 4 Types of Gaps: 1. Common: Likely caused by low trading volume. It will usually be filled (prices slowly revert to that gap). 2. Breakaway -More meaningful than common gaps -They can happen in the middle of the trading day -They have a downward momentum -Suddenly the stock dips down below the support line. The gap is between the support line and the dip down. This is due to a change in psychology, and people start to sell their shares. -Make sure you see an increase in volume at the gap point. That is confirmation of the downward move. -Another way to be sure that the breakaway gap is a healthy gap is if it happens with another pattern (e.g. a descending triangle pattern). 3. Runaway -Similar to the breakaway gap -Instead of going to the down side it is going to the up side -It is basically a stock price jumping up to a new level (typically due to product releases, news events, etc) -Anything that creates positive sentiment creates a runaway gap -There are three possibilities it can go through: 1. Downard trend and back up, hops and continues to go up 2. Upward incline, gap to incline 3. Downward trend to a slingshot upward -Runaway gaps are more powerful when they come out of an ascending triangle or trend line. 4. Exhaustion -Very good to trade with, if you watch them -They can be dangerous if you are new to the stock market or are not spotting them correctly -They happen when a stock shoots up, jumps and continues to trend up, but will eventually decline -This can happen with a decline as well (declines, jumps down, continues to decline and then shoots up) -You want to be cautious with these gaps because they typically happen in a state of panic Continue to learn with me at: http://tradersfly.com/ Check out my courses at : http://rise2learn.com Facebook Fan Page: http://www.facebook.com/tradersfly/ Get My Charts on Twitter: https://twitter.com/tradersfly/
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Text Comments (53)
Drew Andrew (1 month ago)
Love your videos, truly the best on the Tube, thank you for helping others.
You are more than welcome! Thank you so much for watching
Sake Wasuntharaporn (2 months ago)
Awesome teacher. One question please. Does all the gap need to be filled?
No not all gaps need to be filled. For example if a stock is way past in price at higher levels and it's been already a few years then chances are that Gap below won't get filled
Ravi Chan (3 months ago)
wonderful explanation!
Youssef Mehni (4 months ago)
Thank you I was reading the book of Maggie but it was complex but you make everything simple
Youssef Mehni (4 months ago)
Sasha Evdakov Could you recommend me some book to read that are very useful for day trading thank you!
sas forengineering (4 months ago)
are runaways and breakaway gaps closed again ?
Ahmed Raza (4 months ago)
Wow Sasha, This video clearly explains the theory and psychology of the traders in each of the gaps, keep the good work going, Thank you so much.
SoLit CantQuit (7 months ago)
How would one trade a gap down? Everyone teaches gap "up" and go but what about downn is there a long strat to play here??
i hit like button to your video. Nice information.
silmi nawaz (10 months ago)
Dont gaps also occur due to pre-market trading? You mentioned no trading between gaps.
Kiran Ananthu (10 months ago)
If I enter a positional trade which I plan to hold for 3 months or more, When I execute the trade with a bracket order or with a trailing stop loss, will I be covering my risk against any major gap up or gap down?
Rashmi Chiplunkar (1 year ago)
Thanks its very helpful😊
Rishi Agrawal (1 year ago)
You should be fund manager
Abdurazzoq Dadashev (1 year ago)
Wow so excited )))
Raja Jani (1 year ago)
you are marvelous , my regards
Raja Jani (1 year ago)
keep guiding us at every front whether fundamentals or technical, your each and every you tube videos are very educative ..
Sippriana W (1 year ago)
Great teacher, thank you for making this understandable in a simplistic way.
Gledison Fonseca (1 year ago)
Great Video as always. Im just still missing why the gaps necessarily have to be filled. What is the mechanism behind?cheers
Vinay Kanse (1 year ago)
candalstick patterns gup explain plz📈📉📊📊📊
Marwan M (1 year ago)
nice but how to trade it in pre-market and intraday? what is the strategy to enter and exit?
Jae Lyrix (1 year ago)
Great video!!
Parichay Verma (1 year ago)
Hi, can u please make a video on how to trade gaps? Thanks a lot.
Oliver Olonan (1 year ago)
A Natural Teacher of Concepts
Henry L (1 year ago)
what type of gap is QCOM currently experiencing, & where will it general fill (to)?
Pankaj Chaudhary (1 year ago)
Thanks .. very nice piece of information for intra day strategy
Jeremiah Apple (1 year ago)
I really enjoy the visuals in your videos. Thanks!
so of it gaps down just sell
Craig Cress (2 years ago)
Had I watched this video Thursday night, ugh. Thank you for explaining exhaustion gaps, very helpful!
Abdullah Al-Hazzani (2 years ago)
thanks that was useful.
john palma (2 years ago)
Thanks.
De grote Oebidoebie (2 years ago)
I think Brakeaway gabs can also be propelled by stop orders/stop losses that are hit, in combination with market orders.
DjLenchMob (2 years ago)
Hello Sasha, what are the best indicators for gap trading?
DjLenchMob (2 years ago)
+Sasha Evdakov (TradersFly) Thank you for the quick reply! Loved the video! The price and volume indicators any in specific i.e. Bollinger Bands. Also around what time frames are best for gaps charts of 1 min, 5 min, 1 hour, Daily?
Smart Investor (2 years ago)
I have seen exhaustion Gap occurring on more than one day for downside. People panics next day also and sell their stocks.
Dafi8484 (3 years ago)
Wait a common gap is on low volume? Cause it's not very different from a common and runaway when I see this.
I love gaps! Nice video..
Satwik Kamath (3 years ago)
So gaps occur due to extremes in trading volume? So if I understand this correctly, Common- low trading volume (so trend line dissapears because there isnt enough trade volume to create a line.. but once that picks up again and reaches a threshold of some sort, the line reappears at the higher stock price?), Breakthrough, runway and exhaustion- high trading volumes as traders typically fall into the psychology of FOMO(fear of missing out) and try jump on/off board, causing the line to accelerate, reaching another volume threshold that causes the line to dissapear? And Exhaustion gap is just a runaway gap that occurs on the back of a supernova trend?  Please correct me if I am wrong, I'm just trying to internalise this for my own learning :) Sincerely thank you in advance!
Lorenzo Torres (3 years ago)
question if the stocks (Exhaustion Gap) goes down on really bad news , but the decline is very sudden , would it come back up ?
DidOne (4 years ago)
Thanks for the video and the whole tips you enlightened us with. Question: does gaps always get filled? for example gaps that happen in 1 year or two year time? (i use daily chart with candlesticks)
Steven Stam (4 years ago)
Hey Sasha, If a stock rises in a morning spike then consolidates for the rest of the day, until market close, then gaps up in pre market. Would you still consider that an over extended chart, therefore being an exhaustion gap? Or does the consolidation decrease the chances of a morning panic occurring? Thank you Sasha
Steven Stam (4 years ago)
Ok then. If the consolidation before close, up ticked with increased volume, then closed and gaped up in pre market the next day. Would you be very cautious, or would you consider that a buy? Or wait for a bounce or pullback and make a move on that? Sorry to be a pain in the ass. Thank you
Do stocks gap up because trading before market opens? And gap down because traders dump their positions after market closes or before market opens? I understand why gaps occur (news, press release, earning reports), but I still don’t understand the science behind it. Also, what does it mean to fill the gap?
Alan Alda (4 years ago)
Symbol for micron is MU
Alan Alda (4 years ago)
Two days of consecutive up gaps on micron,  How would you categorize these two gaps? Thanks
Martin Lo (4 years ago)
If the common gap will be filled, can i take a short position at a high?
Martin Lo (4 years ago)
Thanks!
Martin Lo (4 years ago)
Or is it too risky to assume it will eventually be filled?
Michael Perry (4 years ago)
Very Good Teacher. Thank you for posting. 
Ulterior1980 (4 years ago)
you missed dead cat bounce formation
ToGetToTerrapin (4 years ago)
Been short SHLD since $40, crowded trade but you may want to take a look if you haven't already, many gaps in that 1 yr chart, the last being 2 successive breakaways... thx again
LiftingPeanuts (4 years ago)
Your videos are very informative and helpful, thank you!

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