The Runaway Gap Trading Strategy targets gaps that occur mid-trend and signal a strong continuation of momentum. These gaps—also known as measuring gaps or momentum gaps—usually appear during the second phase of a trend and are driven by renewed buying or selling pressure.

This strategy is ideal for momentum traders, swing traders, and trend-followers who want to capitalise on explosive moves with continuation potential.

What Is a Runaway Gap?

A runaway gap is a gap that:

• Occurs after a trend has already started
• Is not caused by earnings or news (unlike breakaway gaps)
• Shows up midway through a strong trend
• Indicates growing conviction and acceleration in direction

Unlike common gaps that fill quickly, runaway gaps often don’t fill—at least not immediately—and are signs of a powerful underlying trend.

Why This Strategy Works

• Reflects institutional interest or strong market participation
• Signals the trend has strength and room to run
• Triggers FOMO from retail traders and covering by early contrarians
• Offers clear setups with low risk when paired with structure

When spotted early, runaway gaps can provide some of the highest reward-to-risk trades in trending markets.

How to Trade the Runaway Gap Strategy

1. Identify a Strong Existing Trend

Look for:

• An established trend on the 4H or Daily chart
• Series of higher highs and higher lows (or vice versa)
• Breakout from a prior consolidation or continuation pattern

Ensure the asset is not in a range or choppy phase.

2. Spot the Runaway Gap

Characteristics:

• Gap appears in the middle of the trend
• Not the initial breakout (not a breakaway gap)
• Not at the exhaustion point (not an exhaustion gap)
• Occurs on rising volume, but without extreme news
• Price does not fill the gap within 1–2 sessions

This confirms it is a momentum-driven continuation signal.

3. Enter the Trade

Bullish Runaway Gap Setup:

• Price gaps up during an uptrend and continues to push higher
• Enter on a break above the high of the gap day or a small pullback into the gap
• Place stop just below the gap low or the last swing low

Bearish Runaway Gap Setup:

• Price gaps down in a downtrend and continues dropping
• Enter on break of the low or pullback to gap
• Place stop just above the gap high

Take-Profit Options:

• Measure the distance from the start of the trend to the gap and project it forward
• Use Fibonacci extensions (127.2%, 161.8%)
• Trail stop below recent swing lows or moving average

4. Confirm with Technical Tools

For confluence, use:

• RSI staying strong above 50 (bullish) or below 50 (bearish)
• MACD histogram expanding with the gap
• Volume surge confirming trend participation
• Moving averages: Price staying above 20 EMA (for longs) or below (for shorts)

This confirmation filters false gaps and supports trend conviction.

5. Manage the Trade with Trend Discipline

• Use partial profits on fast moves
• Let the rest ride using trailing stop behind structure
• Watch for exhaustion signals (volume spikes, doji candles, divergence)

Don’t expect a quick gap fill—the trend is your friend in this strategy.

Strategy Summary Table

Component	Details
Gap Type	Runaway / measuring gap
Setup Type	Trend continuation
Entry Trigger	Breakout after gap or pullback into gap
Stop-Loss	Below gap (bullish) or above gap (bearish)
Take-Profit	Measured move or Fibonacci extensions
Timeframe	1H–Daily charts
Best Use Case	Trending assets with no immediate reversal signals

Example: Runaway Gap on Nasdaq 100 (NDX)

• NDX rallies for two weeks and then gaps up 1.2% on no major news
• Volume rises, price consolidates above the gap
• Breakout confirms continuation; trader enters long
• Price rallies another 3% over three sessions, hitting fib target

Conclusion: Ride the Trend with Runaway Gap Confidence

The Runaway Gap Trading Strategy allows traders to confidently enter high-momentum trends that show no signs of slowing. By identifying these gaps early and managing risk with structure, traders can take full advantage of trend continuation setups with excellent risk-to-reward potential.

To master gap trading strategies like this and integrate them into a complete trading plan, enrol in our Trading Courses at Traders MBA and trade momentum with clarity and conviction.