Gap (Bars): the gap divided by the stock’s normal bar size. A minimum of 0.25, or a maximum of -0.25 for gap downs, drops about half of all stocks.
Example numbers, not a real trade
Same 3% gap, two very different stocks. Example numbers, not a real trade.
Swing traders often scan this way after the close and again before the open. Pair it with Relative Volume once the session starts.
Why size the gap to the stock
Percent gaps are easy to read, but they treat every stock the same. A slow utility and a jumpy chip stock don’t move the same on a normal day, so the same 3% means very different things.
Key point
The gap in bars filter fixes that. It divides the gap by how much that stock usually moves in a bar, so the number tells you how unusual the gap is for that stock. A reading of 5 means the gap is five normal bars wide. A reading of 0.8 means it is less than one, which is just another morning for that name.
A recipe some swing traders use: gap in bars of 3 or more, price over $10, average daily volume over 500,000 shares. That skips the routine jumps and keeps the gaps that are big for the stock, even if the percent looks small.
Key point
Example, made-up numbers. A $40 insurance stock gaps 2.5% to $41 after a court ruling. A typical bar for it is 20 cents, so the $1 gap is 5 bars. A $40 software stock gaps 4% to $41.60 on nothing special. Its normal bar is $1.10, so the gap is under 1.5 bars. The percent list puts the software stock first. The bars list puts the insurance stock first, and that is usually the one with a real story.
Overnight gaps also matter for holding positions. If you carry a swing trade overnight, a scan like this tells you each morning which of your names opened with an unusual gap, before you even pull up a chart. Pair it with your own watchlist so you only see the stocks you own or follow.
Key point
Weekends count too. A Monday gap covers news from Friday 4:00 p.m. ET to Monday morning, so Monday lists often run longer than the rest of the week. Plan a few extra minutes for them.
If you’re new to this, try both lists for a week, the percent list and the bars list, side by side. Write down which gaps actually moved after the open. Most folks find the bars list surfaces fewer names, but more of them are worth a look. That’s the whole reason to size the gap to the stock instead of using one number for every ticker in the market.
