How to Predict Breakaway Gaps

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Breakaway Gap

A breakaway gap occurs when the stock price begins trading in a new region (significantly higher or lower than the previous month or so) as a result of an abnormally high volume of trades. Because the gap occurs immediately as the market opens, getting in on the stock before the breakaway gap occurs is a highly profitable action. Most traders – myself included – get really excited to see a correctly-predicted breakaway gap, as it can often mean an immediate double or triple of your investment.

In this video, I explain my method of predicting breakaway gaps. Generally, your best bet is to compare rumors to news. When you find rumors that seem to be backed by facts yet have not appeared in the mainstream news, you might have found a breakaway gap on which to capitalize.

Sometimes a breakaway gap reverses within a few days or weeks, especially in the case of penny stocks (think pump-and-dump). So getting in and out on-time is an important aspect of trading breakaway gaps. You can also benefit from downward breakaway gaps buy shorting stock or buying put options.
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Eric Nystrom says:

What forums or message boards do you go to.Thanks,

Eric Nystrom says:

Good Video on break away gaps.  Keep the videos coming, learn something new every day.  I want to learn the fundamental analysis, the core fundaments on how to predict the price of a stock, to know its under valued or over valued.  A video on this will I think be very educational, or maybe you already have a class on this in Udemy.

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