Understanding Runaway Gaps in Stock Trading
Learn what a runaway gap is and how it signals momentum in stock trading trends.
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A runaway gap refers to a pricing gap on a stock chart that occurs during a strong trend, often as the price moves in the direction of the trend. These gaps indicate a surge in interest and can often signal the mid-point of the trend. Investors see them as a sign of continuing momentum.
FAQs & Answers
- What does a runaway gap indicate in trading? A runaway gap indicates strong momentum in the direction of the trend and can be a signal for investors to consider continuing their positions.
- How can I identify a runaway gap on a stock chart? You can identify a runaway gap by looking for a pricing gap that occurs during a strong trend in the stock's price movement.
- What are other types of gaps in stock trading? Other types of gaps include breakaway gaps and exhaustion gaps, each indicating different market conditions and investor sentiments.