How To Play The Gap And Go | Bulls on Wall Street

How To Play The Gap And Go

On March 20th we saw one of our favourite setups, the Gap and Go. This type of behavior is when a certain stock releases an unexpected news report to the public and traders react strongly. As a result, the stock can gap up and continue higher, especially in the first emotional hour of the trading day. This is also a good indication for the breakaway gap setup for swing traders.

Gap and Go Trade Example

Our prime example is $ESPR, a biopharmaceutical company released news of its drug the previous night. It turns out the FDA recently approved of one of its key drugs in after a positive clinical trial. For a pharmaceutical company, any positive FDA news report is great news. Overnight the stock jumped 27.33% with a lot of premarket volume behind it.

gap and go

Right out of the gate $ESPR started showing strength. Looking at ESPR on the 1 minute chart, you can tell that there was a lot of bullish sentiment in this stock with a lot of opportunities to trade. The first setup was an Opening Range Pattern (ORB) with an entry at around $33.70. If you missed that one, another ORB developed immediately after at $34.20. Right before 9:45AM, the stock then develops a bullish flag pattern and makes a great pop once the stock broke $35.00 and continues to move higher to $36.00 then $37.00. All you needed to do was scale out of your position along the way. Many traders in our chat started with a comfortable profit within the first 30 minutes of the trading day.

Later on, $ESPR turned out to be one of the biggest movers of the day. After breaking out a flat top breakout setup above $37 it ran all the way up to $42.50. This was definitely the hot stock to trade for the day.

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