Gaps typically occur when there is a more significant difference between the bid and ask, and most of the gaps occur at the market opening because, in an alive market, there is not much difference between bid-ask spreads and current prices.

1. A Trader guide to stock market gaps
Having an understanding of gaps is essential so that you can plan your trades. There are many
kinds of gaps in the stock market, including :
1. Common gaps
2. Breakaway gaps
3. Runway gaps
4. Exhaustion gaps
Gaps typically occur when there is a more significant difference between the bid and ask, and
most of the gaps occur at the market opening because, in an alive market, there is not much
difference between bid-ask spreads and current prices.
COMMON GAP
The term “common gap” refers to a small, common gap. Whenever the market opens sideways,
and there is a tiny gap from yesterday’s coles to today’s open, like 0.3% to 0.3%, then we call it
a common gap.
A common gap is also called an area gap, and a trading gap is, characterized by average
trading volume and generally does not offer any good trading opportunities.
BREAKAWAY GAP
Breakaways Gaps occur when a stock is consolidated, and a gap breaks a range of
consolidation. Then we call it a breakaway gap. Generally, a breakaway gap indicates the start
of a new trend. A gap can be identified by a sharp rise in trading volume, which can trigger
swing or intraday trades.
RUNAWAY GAPS
A runaway gap is an indication of a healthy trend. We call it a Runway Gap when there is no
consolidation but a gap between yesterday’s closing and today’s opening.
The runaway gap indicates strength and can be used to book profits from existing swing
positions. Runaway gaps usually occur after the breakaway gaps, as the runaway gap indicates
the continuation of a particular trend.
EXHAUSTION GAP
In general, the exhaustion gap indicates a trend reversal. Usually, the exhaustion gap occurs
when there is a big gap, but the price reverses and fills the gap, continuing that trend for a short
time.
The four types of gaps that every trader should know about are listed below. Each gap created
in the market tries to indicate a potential move, so every trader should have a basic
understanding of the different types of gaps.