Gap Trading

Gap Trading

Trade price gaps by classifying gap type first -- different types require opposite strategies.

Identification

A gap exists when current open > previous high (gap up) or current open , exchange=, interval="1D", date=)

Gap size = (Open - Previous Close) / Previous Close x 100. Ignore gaps 2x | Yes | Starting new trend | ~30% | Continuation (gap-and-go) |
| **Runaway** | ~1.5x | No | Mid-trend | ~50% | Continuation |
| **Exhaustion** | >2x | No | Extended trend end | ~80% | Fade (reversal) |

## Workflow

### 1. Detect and Classify

getcandlesarounddate(symbol=, exchange=, interval="1D", date=) getindicators(indicator_code="mfi", symbol=, exchange=, interval="1D")

Calculate gap size %. Compare volume to 20-period average. Classify using table above.

### 2. Check Trend Context

getindicators(indicatorcode="dmi", symbol=, exchange=, interval="1D") getindicators(indicatorcode="ema", symbol=, exchange=, interval="1D")

Determine if ranging, starting trend, mid-trend, or extended trend to confirm classification.

### 3. Mark Gap Zone

drawchartanalysis(action="create", drawing={ "type": "highlight", "points": [ {"time": , "price": }, {"time": , "price": } ], "options": {"text": " Gap (+/-X.X%)"} })

### 4. Apply Strategy

- **Gap Fill (fade)**: For common/exhaustion gaps. Wait 15-30 min, enter on reversal toward previous close. Stop beyond gap extreme.
- **Gap-and-Go (continuation)**: For breakaway/runaway gaps. Wait for first 15-30 min consolidation, enter on breakout in gap direction. Stop below gap open -- if gap fills, thesis is wrong.
- **Gap Reversal**: For exhaustion gaps at trend end. Enter on reversal candle (engulfing, hammer). Target full gap fill.

### 5. Report to Orchestrator

Gap type and rationale, gap size, volume confirmation, strategy recommendation, gap boundaries, fill target, stop level.

## Key Rules

- NEVER enter during the first 15-30 minutes -- initial price discovery is pure noise
- NEVER treat all gaps the same -- common gaps fill ~70%, breakaway gaps only ~30%
- NEVER fade a breakaway gap through major resistance with high volume -- that is fighting institutional flow
- For gap-and-go stops, gap filling = thesis invalidated = exit
- During event-driven gaps (earnings, news), use wider stops

## Related Skills

- **breakout-trading** -- gap-and-go follows breakout principles
- **momentum-trading** -- breakaway gaps create momentum moves

## Source & license

This open-source skill is cataloged on AgentStack and links to its original source — we do not rehost the code.

- **Author:** [SKE-Labs](https://github.com/SKE-Labs)
- **Source:** [SKE-Labs/agent-trading-skills](https://github.com/SKE-Labs/agent-trading-skills)
- **License:** Apache-2.0

Install and usage instructions live in the source repository linked above.