There are several types of gaps, but we will cover only four of them. Others, like the ex-dividend gap and the opening gap, are inconsequential or too advanced.
Gaps are exciting! Those that appear at a chart pattern breakout can push a stock like a booster stage does to a rocket. For example, breakout day gaps in symmetrical triangles (bull markets, up breakouts) show gains averaging 36 percent compared to 28 percent for those without gaps.
Sometimes the booster stage fails to ignite as it does in ascending triangles. There, gaps hurt performance: 29 percent versus 35 percent gain for those with and without gaps, respectively.
Being able ...