What Is a Gap—and When Do Fills Occur?
A gap is the price difference between the prior close and the next open. Gaps up leave unfilled space below; gaps down leave space above. Fill means price trades back through the gap zone toward the prior close. Common gaps in range-bound names often fill within sessions. Breakaway gaps at news or range breaks may not fill quickly—or at all. Exhaustion gaps after extended moves frequently fill as trend pauses. Measuring gap size relative to ATR helps set expectations: small gaps in quiet names fill more often than huge gaps on triple volume after earnings.
Not all gaps are equal—classify gap type before assuming fill edge.
How Do You Identify High-Probability Gap Fill Setups?
Look for modest gaps without structural breakout—price still inside prior week range. Low to moderate opening volume on the gap day suggests lack of institutional commitment. Fade gaps into nearby resistance for gap ups or support for gap downs. First-hour failure to hold gap extremes—lower high on gap up—signals fill bias. Avoid fading gap ups through daily resistance on triple relative volume—that is breakout, not fill. Index gaps behave differently from single-stock catalyst gaps; know which you trade.
Pre-market gap scanners need a written filter list—chasing every gap is not a strategy.
What Entry and Exit Rules Define Gap Fill Trades?
Short gap ups: enter on break of opening range low or first five-minute lower high after failed continuation; stop above gap day high. Long gap downs: enter on reclaim of opening range high with stop below gap day low. Target partial at fifty percent fill, balance at prior close or full fill. Scale out as price enters gap zone—fills often stall mid-gap. Time stop if fill does not progress within first ninety minutes for day trades. For swing gap fills, use daily close back inside gap as partial exit signal.
Entering at the open without confirmation sacrifices risk-reward—wait for failure of gap-direction momentum.
When Should You Avoid Gap Fill Strategies?
Earnings and FDA gaps with massive volume and range expansion. Gap and go momentum leaders holding above VWAP all session. Breakaway gaps from multi-month bases on sector rotation. Macro gap days when index trend strongly supports gap direction. Thin floats where halts and squeezes invalidate stop placement. Gap fill is a mean-reversion niche—forcing it in trend days produces repeated stop-outs at the highs. Mark no-trade gap types after reviewing twenty examples in your universe.
If price holds gap extreme through first hour on rising volume, fill thesis is wrong—stand aside or flip playbook.
How Do You Manage Risk on Gap Fill Trades?
Risk one percent or less—gap trades can move fast against you at the open. Stops must be beyond gap day extreme, not mid-gap hope levels. Size smaller on wide-gap names where stop distance is large. Avoid averaging into losers when fill stalls—either add at planned scale points with smaller clips or exit. Track fill rate by gap size bucket; adjust filters when expectancy drops. Gap fill strategies reward selectivity and quick invalidation recognition more than high frequency.
Document gap percent, volume ratio, and first-hour structure—patterns in your journal beat generic fill folklore.