The Gap and Go Strategy is a momentum-based intraday trading approach that targets strong opening price gaps that continue in the same direction after the market opens. Unlike the Gap Fade Strategy which bets on reversal, Gap and Go aims to ride the continuation of explosive moves fuelled by pre-market news, volume surges, and trader excitement.

It is particularly popular among day traders, momentum scalpers, and traders of small-cap stocks, though it also applies to indices, forex, and commodities.

**What Is a Gap and Go Setup?

A Gap and Go setup forms when:

• A security gaps up or down at the market open
• The move is supported by strong volume and often news catalysts
• After a brief consolidation or minor pullback, the price continues in the gap direction

Traders enter as soon as the momentum resumes, typically within the first 15–30 minutes of the session.

Why the Gap and Go Strategy Works

• Gaps caused by news (earnings, upgrades, M&A) attract institutional volume and retail interest
• Short sellers often cover, adding fuel to the fire
• Momentum traders pile in once the breakout is confirmed
• With the right volume and float, prices can run quickly, delivering large R-multiple gains

The strategy relies on speed, conviction, and early confirmation.

How to Trade the Gap and Go Strategy

1. Identify a Valid Pre-Market Gap

Pre-market checklist:

• Gap of 3% or more from previous close
• Catalyst present (news, earnings, guidance, analyst upgrade/downgrade)
• High relative volume (at least 2x average pre-market volume)
• For stocks: Prefer low to medium float for explosive potential
• For indices: Watch key economic releases and overnight sentiment

Mark the pre-market high/low and gap level.

2. Wait for Opening Action and Setup Formation

At the open:

• Price may initially pull back, consolidate, or fake out
• Ideal setup: flat base, flag pattern, or tight range consolidation
• Avoid chasing large green candles without consolidation

Let price settle for 5–15 minutes, then watch for a breakout continuation.

3. Enter the Trade on Confirmation

Entry trigger:

• Break above the opening range high (for gap up)
• Break below the opening range low (for gap down)
• Combine with volume surge or price action confirmation (bullish engulfing, momentum candle)

Stop-loss:

• Below the consolidation low (long)
• Above the consolidation high (short)
• Or tight stop below opening range (if scalping)

Take-Profit Options:

• Use measured move (height of opening base projected upward)
• Round number levels (e.g. $10, $15, $100)
• Trailing stop to ride extended moves

4. Add Confluence for High-Probability Setups

Stack the odds with:

• Pre-market chart structure and support/resistance
• VWAP hold and push
• Strong relative strength compared to sector or index
• Multiple timeframe alignment (1M, 5M, 15M)

Avoid weak stocks gapping up on no news or low volume.

5. Exit with Discipline

Common exit strategies:

• Sell partial at 1:1 R:R, trail stop for the rest
• Close entire position at resistance or volume exhaustion
• Exit on VWAP break or failed re-test of breakout level

Never let a winner turn into a loser—momentum fades fast.

Strategy Summary Table

Component	Details
Setup Type	Momentum continuation after open gap
Ideal Gap Size	3%+ with catalyst and volume
Entry Trigger	Break of opening range or consolidation
Stop-Loss	Below structure or consolidation (tight risk)
Take-Profit	Measured move, resistance, or trailing stop
Best Timeframe	1M–5M for execution, 15M for structure
Best Use Case	News-driven moves in equities, indices, and FX

Example: Gap and Go on Tesla (TSLA)

• TSLA gaps up 4.5% on better-than-expected earnings
• Pre-market volume > 3x average, small pullback at open
• Price consolidates for 10 minutes, then breaks out with strong volume
• Trader enters above opening range, stops below pullback low
• Price runs +7% within 2 hours, producing 3R+ return

Conclusion: Ride the Momentum with Gap and Go

The Gap and Go Strategy is ideal for traders who thrive on fast setups, tight risk, and early session action. When combined with a clear catalyst, disciplined entry, and strong volume, this strategy delivers powerful intraday moves and consistent opportunities.

To learn how to master Gap and Go setups and other high-conviction strategies, enrol in our Trading Courses at Traders MBA and turn volatility into opportunity.