• Jerremy Alexander Newsome

The 4 Types of Gaps

The 4 Types of Gaps

When it comes to trading, there are literally countless signals, indicators, chart patterns and candlestick patterns that traders can use. Often times, it becomes a buffet of confusion: too many choices and an overwhelming amount of information.

In my opinion, one of the easiest ways to cut down on as much clutter as possible is to attack with the 'less is more approach”. In order for me to take a swing trade or day trade, there needs to be a gap in the price action. This will automatically and drastically reduce the number of stocks to filter through while trying to find a trade.

Gaps create emotion. They scare the majority of investors in a particular company. Usually the 'why is this stock gapping” question eludes the average investor. Could be earnings, news, or a myriad of other reasons, but the gap is unexpected; therefore, it's scary and concerning.