S&P 500   3,980.35 (+0.01%)
DOW   31,580.63 (+0.00%)
QQQ   298.28 (-0.23%)
AAPL   155.01 (-0.61%)
MSFT   257.35 (-0.29%)
META   160.47 (+0.05%)
GOOGL   108.72 (-0.67%)
AMZN   128.42 (-0.82%)
TSLA   285.24 (+0.54%)
NVDA   137.18 (+0.03%)
NIO   17.43 (-0.29%)
BABA   88.94 (-1.83%)
AMD   81.48 (+2.35%)
T   16.84 (-0.18%)
MU   54.46 (-0.98%)
CGC   3.41 (+0.00%)
F   15.17 (-1.69%)
GE   73.19 (-0.53%)
DIS   111.75 (-0.83%)
AMC   8.43 (+0.48%)
PYPL   95.19 (+0.23%)
PFE   46.37 (+0.52%)
NFLX   225.00 (-1.73%)
S&P 500   3,980.35 (+0.01%)
DOW   31,580.63 (+0.00%)
QQQ   298.28 (-0.23%)
AAPL   155.01 (-0.61%)
MSFT   257.35 (-0.29%)
META   160.47 (+0.05%)
GOOGL   108.72 (-0.67%)
AMZN   128.42 (-0.82%)
TSLA   285.24 (+0.54%)
NVDA   137.18 (+0.03%)
NIO   17.43 (-0.29%)
BABA   88.94 (-1.83%)
AMD   81.48 (+2.35%)
T   16.84 (-0.18%)
MU   54.46 (-0.98%)
CGC   3.41 (+0.00%)
F   15.17 (-1.69%)
GE   73.19 (-0.53%)
DIS   111.75 (-0.83%)
AMC   8.43 (+0.48%)
PYPL   95.19 (+0.23%)
PFE   46.37 (+0.52%)
NFLX   225.00 (-1.73%)
S&P 500   3,980.35 (+0.01%)
DOW   31,580.63 (+0.00%)
QQQ   298.28 (-0.23%)
AAPL   155.01 (-0.61%)
MSFT   257.35 (-0.29%)
META   160.47 (+0.05%)
GOOGL   108.72 (-0.67%)
AMZN   128.42 (-0.82%)
TSLA   285.24 (+0.54%)
NVDA   137.18 (+0.03%)
NIO   17.43 (-0.29%)
BABA   88.94 (-1.83%)
AMD   81.48 (+2.35%)
T   16.84 (-0.18%)
MU   54.46 (-0.98%)
CGC   3.41 (+0.00%)
F   15.17 (-1.69%)
GE   73.19 (-0.53%)
DIS   111.75 (-0.83%)
AMC   8.43 (+0.48%)
PYPL   95.19 (+0.23%)
PFE   46.37 (+0.52%)
NFLX   225.00 (-1.73%)
S&P 500   3,980.35 (+0.01%)
DOW   31,580.63 (+0.00%)
QQQ   298.28 (-0.23%)
AAPL   155.01 (-0.61%)
MSFT   257.35 (-0.29%)
META   160.47 (+0.05%)
GOOGL   108.72 (-0.67%)
AMZN   128.42 (-0.82%)
TSLA   285.24 (+0.54%)
NVDA   137.18 (+0.03%)
NIO   17.43 (-0.29%)
BABA   88.94 (-1.83%)
AMD   81.48 (+2.35%)
T   16.84 (-0.18%)
MU   54.46 (-0.98%)
CGC   3.41 (+0.00%)
F   15.17 (-1.69%)
GE   73.19 (-0.53%)
DIS   111.75 (-0.83%)
AMC   8.43 (+0.48%)
PYPL   95.19 (+0.23%)
PFE   46.37 (+0.52%)
NFLX   225.00 (-1.73%)

Gap Down Stocks

A gap is a break between prices on a chart that occurs when the price of a stock makes a sharp move up or down with no trading occurring in between. Stocks that "gap down" are companies that open at prices that are significantly lower than their previous closing prices, often due to after-hours news items that negatively affect investor perceptions of the company's value. More about gap down stocks.

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CompanyGap Down %Opening PricePrevious CloseCurrent PricePrice Change Since OpenDaily VolumeIndicator(s)
-17.4%$6.90$8.35$6.62-4.1%1,457Gap Down
American Eagle Outfitters, Inc. stock logo
American Eagle Outfitters
-14.8%$9.88$11.59$10.63+7.6%511,385Earnings Report
Analyst Report
News Coverage
Gap Down
Chembio Diagnostics, Inc. stock logo
Chembio Diagnostics
-13.6%$0.54$0.63$0.55+1.6%2,380Gap Down
PlayAGS Inc stock logo
-12.6%$6.65$7.61$6.30-5.3%5,935Gap Down
Scienjoy Holding Co. stock logo
-11.8%$3.35$3.80$3.35flat1,600Upcoming Earnings
Torrid Holdings Inc. stock logo
-9.7%$4.85$5.37$4.79-1.2%6,163Earnings Report
Analyst Report
News Coverage
Gap Down
The Arena Group Holdings, Inc. stock logo
The Arena Group
-9.6%$12.04$13.32$12.32+2.3%421Gap Down
Wheeler Real Estate Investment Trust, Inc. stock logo
Wheeler Real Estate Investment Trust
-9.6%$1.79$1.98$1.72-3.9%352Gap Down
Sylvamo Co. stock logo
-9.2%$36.75$40.46$36.50-0.7%58,834Gap Down
Wayfair Inc. stock logo
-9.0%$46.16$50.70$46.57+0.9%87,218Gap Down
HyreCar Inc. stock logo
-8.8%$1.25$1.37$1.25flat16,192Options Volume
Gap Down
Immunome, Inc. stock logo
-8.7%$4.75$5.20$4.81+1.3%636Gap Down
IperionX Limited stock logo
-8.6%$5.94$6.50$6.34+6.7%551Gap Down
Great Panther Mining Limited stock logo
Great Panther Mining
-8.6%$0.30$0.32$0.28-6.4%32,135Positive News
Gap Down
Advanced Human Imaging Limited stock logo
Advanced Human Imaging
-8.2%$0.95$1.04$0.96+1.1%2,067Positive News
Gap Down
AdTheorent Holding Company, Inc. stock logo
-8.2%$2.13$2.32$2.31+8.5%1,045Gap Down
Grid Dynamics Holdings, Inc. stock logo
Grid Dynamics
-7.6%$18.30$19.80$18.06-1.3%131,173News Coverage
Gap Down
Top Ships Inc. stock logo
Top Ships
Biophytis S.A. stock logo
-7.2%$1.03$1.11$0.92-10.7%3,270News Coverage
Gap Down
MasterCraft Boat Holdings, Inc. stock logo
MasterCraft Boat
-7.2%$22.04$23.75$20.25-8.1%1,210Gap Down
McCormick & Company, Incorporated stock logo
McCormick & Company, Incorporated
-7.1%$78.98$85.00$78.41-0.7%29,978Analyst Report
News Coverage
Gap Down
Skillsoft Corp. stock logo
-7.1%$2.50$2.69$2.41-3.6%17,812Analyst Report
News Coverage
-7.0%$3.33$3.58$3.42+2.7%3,542Gap Down
LiveOne, Inc. stock logo
Cardlytics, Inc. stock logo
-6.8%$11.71$12.56$11.56-1.3%1,470Analyst Downgrade
Gap Down
Inter & Co, Inc. stock logo
Inter & Co, Inc.
-6.7%$3.88$4.16$4.00+3.1%1,734Analyst Upgrade
Positive News
Gap Up
Hemisphere Media Group, Inc. stock logo
Hemisphere Media Group
-6.5%$7.07$7.56$7.10+0.4%701Positive News
Gap Down
Icosavax, Inc. stock logo
-6.4%$4.83$5.16$5.04+4.3%440Gap Down
Surrozen, Inc. stock logo
-6.4%$2.49$2.66$2.60+4.4%280News Coverage
Gap Up
Arqit Quantum Inc. stock logo
Arqit Quantum
-6.3%$5.32$5.68$5.76+8.3%454News Coverage
Positive News
Gap Down
Spero Therapeutics, Inc. stock logo
Spero Therapeutics
-6.3%$1.34$1.43$1.23-8.2%68,865News Coverage
Gap Down
Bilibili Inc. stock logo
-6.2%$22.16$23.62$20.42-7.9%407,774Analyst Upgrade
News Coverage
Gap Down
MINISO Group Holding Limited stock logo
-6.1%$5.35$5.70$5.52+3.2%3,430Gap Down
BioVie Inc. stock logo
-6.1%$2.92$3.11$3.02+3.4%5,159Upcoming Earnings
News Coverage
Gap Down
Cheetah Mobile Inc. stock logo
Cheetah Mobile
-6.0%$3.13$3.33$3.13flat18Stock Split
-6.0%$4.26$4.53$4.42+3.8%8Gap Down
Freshpet, Inc. stock logo
-6.0%$36.67$38.99$38.07+3.8%5,091Analyst Report
Options Volume
News Coverage
Gap Down
a.k.a. Brands Holding Corp. stock logo
a.k.a. Brands
-5.8%$2.75$2.92$2.92+6.2%1,288Gap Up
Kuke Music Holding Limited stock logo
Kuke Music
-5.8%$0.75$0.80$0.78+3.6%701Gap Down
-5.7%$7.63$8.09$7.77+1.8%539Gap Down
TherapeuticsMD, Inc. stock logo
-5.7%$7.63$8.09$7.77+1.8%539Gap Up
TherapeuticsMD, Inc. stock logo
-5.7%$7.63$8.09$7.77+1.8%539Gap Up
Power REIT stock logo
Power REIT
-5.7%$14.32$15.18$15.00+4.7%52Gap Down
Shoals Technologies Group, Inc. stock logo
Shoals Technologies Group
-5.6%$26.20$27.76$27.50+5.0%23,657Analyst Downgrade
Gap Down
SelectQuote, Inc. stock logo
-5.6%$1.35$1.43$1.41+4.4%5,831Gap Down
ZeroFox Holdings, Inc. stock logo
FSD Pharma Inc. stock logo
FSD Pharma
-5.4%$0.88$0.93$0.88flat200Positive News
FSD Pharma Inc. stock logo
FSD Pharma
-5.4%$0.88$0.93$0.88flat200Positive News
Mesa Air Group, Inc. stock logo
Mesa Air Group
-5.3%$2.31$2.44$2.39+3.5%970Analyst Downgrade
Gap Down
Woodside Energy Group Ltd stock logo
Woodside Energy Group
-5.2%$21.50$22.69$21.58+0.4%5,617Dividend Announcement
Gap Down
Fresenius Medical Care AG & Co. KGaA stock logo
Fresenius Medical Care AG & Co. KGaA
-5.2%$16.16$17.05$16.27+0.7%6,412Gap Down
Verint Systems Inc. stock logo
Verint Systems
-5.2%$43.06$45.42$41.76-3.0%13,536Analyst Report
News Coverage
Gap Down
Burford Capital Limited stock logo
Burford Capital
-5.2%$8.25$8.70$8.39+1.7%6,975Gap Down
High Trading Volume
Burford Capital Limited stock logo
Burford Capital
-5.2%$8.25$8.70$8.39+1.7%6,875Gap Down
Burford Capital Limited stock logo
Burford Capital
-5.2%$8.25$8.70$8.39+1.7%6,875Gap Down
Datasea Inc. stock logo
9F Inc. stock logo
-5.2%$0.31$0.32$0.34+11.2%1,200Gap Down
Copart, Inc. stock logo
-5.0%$112.83$118.83$113.18+0.3%16,715Earnings Report
News Coverage
Gap Down
Sunrise New Energy
-5.0%$3.20$3.37$3.15-1.6%1,055News Coverage
Gap Down
Eqonex Limited stock logo
EyePoint Pharmaceuticals, Inc. stock logo
EyePoint Pharmaceuticals
Cytosorbents Co. stock logo
-4.9%$1.73$1.82$1.73flat200Gap Down
Caleres, Inc. stock logo
-4.9%$24.70$25.98$25.35+2.6%1,516Gap Down
Hall of Fame Resort & Entertainment stock logo
Hall of Fame Resort & Entertainment
-4.8%$0.72$0.76$0.72+0.1%300Gap Up
Sprout Social, Inc. stock logo
Sprout Social
-4.7%$56.86$59.68$59.70+5.0%1,195Gap Down
Cyxtera Technologies, Inc. stock logo
Cyxtera Technologies
Golden Path Acquisition Co. stock logo
Golden Path Acquisition
MedAvail Holdings, Inc. stock logo
-4.6%$1.04$1.09$1.04flat580Gap Down
iMedia Brands, Inc. stock logo
iMedia Brands
SkyWest, Inc. stock logo
-4.6%$20.26$21.23$20.32+0.3%4,430Analyst Downgrade
Gap Down
Solid Biosciences Inc. stock logo
Solid Biosciences
-4.5%$0.63$0.66$0.66+4.8%524Gap Down
Celularity Inc. stock logo
-4.5%$2.76$2.89$2.78+0.7%5,826Gap Down
IMARA Inc. stock logo
-4.5%$1.92$2.01$2.15+12.0%259,063News Coverage
Gap Down
High Trading Volume
Aqua Metals, Inc. stock logo
Aqua Metals
Diebold Nixdorf, Incorporated stock logo
Diebold Nixdorf
-4.4%$2.82$2.95$2.84+0.7%9,094Gap Down
SRAX, Inc. stock logo
-4.4%$2.17$2.27$2.32+6.9%1,875Upcoming Earnings
Gap Up
Grindrod Shipping Holdings Ltd. stock logo
Grindrod Shipping
-4.4%$23.01$24.07$23.43+1.8%3,824Gap Down
Theseus Pharmaceuticals, Inc. stock logo
Theseus Pharmaceuticals
-4.4%$7.21$7.54$8.03+11.4%409Gap Down
Enlivex Therapeutics Ltd. stock logo
Enlivex Therapeutics
-4.3%$4.92$5.14$4.93+0.2%700Positive News
Gap Down
Flora Growth Corp. stock logo
Flora Growth
-4.3%$0.85$0.89$0.88+3.5%2,786News Coverage
Gap Down
Entrada Therapeutics, Inc. stock logo
Entrada Therapeutics
-4.3%$13.74$14.35$13.74flat101Gap Down
Guardforce AI Co., Limited stock logo
Guardforce AI
-4.2%$0.34$0.36$0.33-2.9%23,135Positive News
Evolve Transition Infrastructure LP stock logo
Evolve Transition Infrastructure
The Glimpse Group, Inc. stock logo
The Glimpse Group
-4.2%$5.69$5.94$5.88+3.3%313Gap Down
Omeros Co. stock logo
Cara Therapeutics, Inc. stock logo
Cara Therapeutics
-4.2%$10.50$10.96$10.78+2.7%2,007Gap Down
Purple Innovation, Inc. stock logo
Purple Innovation
-4.1%$2.80$2.92$2.89+3.2%4,078Positive News
Gap Down
Brf S.A. stock logo
-4.1%$3.05$3.18$3.08+1.0%83,648Gap Down
Canadian Solar Inc. stock logo
Canadian Solar
-4.1%$45.09$47.01$44.27-1.8%34,322Analyst Downgrade
Gap Down
OneWater Marine Inc. stock logo
OneWater Marine
Kontoor Brands, Inc. stock logo
Kontoor Brands
-4.0%$34.87$36.32$34.25-1.8%1,342Gap Down
-4.0%$1.94$2.02$1.94flat220Gap Down
Sonder Holdings Inc. stock logo
-3.9%$1.95$2.03$2.11+8.2%18,483Gap Up
PagSeguro Digital Ltd. stock logo
PagSeguro Digital
-3.9%$14.39$14.97$14.72+2.3%27,309Analyst Report
Gap Down
DouYu International Holdings Limited stock logo
DouYu International
-3.8%$1.50$1.56$1.55+3.0%19,983Gap Down
Build-A-Bear Workshop, Inc. stock logo
Build-A-Bear Workshop
-3.8%$12.75$13.26$12.93+1.4%1,993Earnings Report
Analyst Revision
Gap Down
Kezar Life Sciences, Inc. stock logo
Kezar Life Sciences
-3.8%$9.30$9.67$9.67+4.0%5,449Gap Down
Navitas Semiconductor Co. stock logo
Navitas Semiconductor
-3.8%$5.29$5.50$5.58+5.5%7,542Gap Down
Ginkgo Bioworks Holdings, Inc. stock logo
Ginkgo Bioworks
-3.8%$2.53$2.63$2.69+6.3%125,817Gap Down
Plus Therapeutics, Inc. stock logo
Plus Therapeutics
-3.8%$0.73$0.76$0.74+1.4%4,001Gap Down
How Investors Can Identify and Successfully Trade Gap-Down Stocks

Trading gap-down stocks can be a profitable strategy for active, risk-tolerant investors

Gap-down stocks are stocks that open at a lower level than the previous day’s closing price. A signature feature of a gap-down stock is a sharp downward price move with no other trading occurring before or after. This movement creates a price gap. Investors can identify gap-down stocks during after-hours and pre-market trading. Reasons why a stock may gap down include the release of news about the stock, such as an earnings report that missed analysts’ expectations or some sort of geo-political event that may incite speculators to bid down the price of the stock.

A gap-down stock indicates a trend that may either be short-lived (i.e. the gap fills quickly) or could be the beginning of a negative reversal for the stock. Trading the gap requires discipline and an understanding of how to analyze the gap. An effective trading strategy will also require the use of trailing stops that will help the trader exit the trade before key levels of support or resistance are breached (which usually indicates the trend is breaking).

In this article we’ll dissect gap-down stocks by defining what they are and how traders identify them. After that, we’ll review the different kinds of gaps and how to identify them. We’ll also review some of the more common trading strategies for gap-down stocks.

Why Are Gap-Down Stocks Important?

Anytime an investor identifies a stock that is gapping down, it indicates a large volume of sellers. However, what’s harder to tell is whether the gapping action is short lived or whether it will continue to become a trend.

Investors who want to trade gap-down stocks can easily find them by using a stock screener. Once investors identify a potential gap-up stock to trade, they should carefully study the longer term charts of the stock to check for clearly defined areas of support and resistance.

 It is important to look at stocks that are trading with a high volume (a good average volume is above 500,000 shares a day). A gap-down stock is clearly represented in a candlestick pattern. A candlestick is a technical indicator that shows the opening and closing price of a stock for a specific period. The color and composition of the candlestick provide information about a stock’s direction and momentum.

One word of caution should come into play here. Although any stock can gap down, significant price movement can be common with penny stocks or other obscure stocks. In this case, the stock may show a significantly large gap. However, the trading volume for these stocks is typically fairly low. This not only explains the gap, but also is a good indication that it may be difficult to trade. 

How Can Investors Interpret the Significance of a Stock that is Gapping Down?

The gap in a gap-down stock is either a “full gap” or “partial gap”.

  • A full gap occurs when a stock opens at a lower level than the previous session’s low.
  • A partial gap occurs when a stock opens below the previous day’s closing price.

Here’s an example that illustrates the difference between a full gap and a partial gap. During the trading day the stock of Company XYZ closes at $35. However, during the day the stock was trading as low as $32 per share. When the market opens on the following trading day, the stock was at $31. This indicates a full gap because the price was below the previous daily low. However, if the stock opens between $32 and $35 it would be a partial gap because the stock price would be below the previous close but above the previous day’s low.

For many investors, full gaps offer a better trading opportunity because they provide a bigger window for profit (sometimes the gap can be in place for several days). This is, in part, due to what a full gap suggests about supply and demand. If a gap-down stock opens below the previous daily low it means the stock is under tremendous selling pressure. This increase selling demand signals the market maker that the stock requires a significant price change to fill market orders. With a partial gap, the demand does not typically require a large change in price.

Beyond the terms full gap and partial gap, gaps generally fall into one of four categories:

  • Breakaway Gap – This is a gap that takes place at the end of a pricing pattern and signals the start of a new trend. A breakaway gap coincides with high volume.
  • Exhaustion Gap – This is a gap that takes place near the end of a pricing pattern and represents a final attempt to set a new high or low. An exhaustion gaps coincides with low volume.
  • Common Gap – A common gap is one that cannot be placed in a price pattern. It simply represents an area where the price has gapped.
  • Continuation Gap – This is a gap that occurs in the middle of a price pattern and signals a rush of buyers or sellers who share a common belief in the underlying stock’s future direction.

It is common for gaps to get filled in naturally. This means the stock price will move back to its original level. Because of the volatility around earnings season, this is typically a time when stocks will make large price movements.

One reason for this is that it’s not uncommon for analysts to be overly pessimistic and push a stock down too much. In this case, there will almost always be a correction as the market absorbs the news and investors push the stock higher. If the movement is done without firm support and resistance levels, the stock may revert back because there is nothing to keep it anchored at that level.

Also, exhaustion gaps are more likely to be filled since they happen at the end of a pricing pattern. In the case of a gap-down stock, the end of a pricing pattern is a signal for buyers to start entering the stock, making it more likely to start an uptrend.

What are Some Effective Trading Strategies for Gap-Down Stocks?

Once you are familiar with the mechanics of gaps and understanding how to look for potential gap trading opportunities, it’s time to look at some common gap trading strategies. These involve having clear rules for entering and exiting a trade. Gap trading can be risky and having the discipline to follow entry and exit points is one way for you to help minimize that risk.

Most gap trading occurs one hour after the market opens to allow time for the stock price to settle into a range. No matter what strategy is being used, it is important to set trailing stops that provide a point where you exit the trade in case the trade starts moving in the opposite direction. For example, if you buy a stock at $50, you could set a trailing stop of 5 percent, in this case $47.50. If the stock rises to $60, you raise the stop to $55.50 (5% of $60) and keep on raising it while the price rises. The opposite would occur if you’re trying to short the same stock at $50. In this case, you would set a trailing stop at $53.50. If the price drops to $40, you would reset the stop at $42. Trailing stops will usually be tighter (smaller) for partial gap stocks as opposed to full gap stocks.

Here are the most common trading strategies for gap-down stocks. These will occur one hour after the market open (typically 10:30 A.M. EST). These strategies also work for after-hours or pre-market trading.

  • Full Gap Long Position (Buy): Set a long trailing stop at two ticks (defined by the bid/ask spread) above whatever the previous day’s low stock price. The bid/ask spread is usually either one-eight or one-quarter point.
  • Full Gap Short Position (Sell): Set a short trailing stop at two ticks below the lowest stock price reached in the first hour of trading.
  • Partial Gap Long Position (Buy): Set a long stop two ticks above the high achieved in the first hour of trading.
  • Partial Gap Short Position (Sell): Set a short stop two ticks below the low achieved in the first hour of trading.

What Is a Dead Cat Bounce and How Can Investors Successfully Trade It?

A dead cat bounce is a short trading strategy unique to gap-down stocks. A dead cat bounce is a significant psychological market event that is triggered by a significant market event that causes a wave of selling. Even though the stock may move up a little bit, it is really just an opportunity for sellers to get out.

The general idea behind a dead cat bounce is a stock that gaps down in overnight trading, continues to go down at the opening bell but then rallies to a point near the opening price before continuing its downward trend.

For a dead cat bounce to exist a few conditions need to be met.

  1. The stock must show a significant gap from the prior day’s closing price. If the stock is not considered to be volatile, many traders use 5% as a guideline. For volatile stocks, they usually look for a much larger gap.
  2. The stock must decline for at least five minutes once trading begins. If the price doesn’t keep falling, there can’t be a bounce.
  3. The stock will then start to rally in an area close to its opening price. This will typically represent a resistance level. This is where traders should be looking to take a short position.
  4. The stock will then fall again. This is the confirmation that the stock is indeed having a dead cat bounce.

The Bottom Line on Gap-Down Stocks

On any given day on any of the major stock exchanges, it’s not uncommon for stocks to display volatile price moves within the course of a trading day. However high-frequency traders, particularly day traders understand – and attempt to profit from – the activity that happens after the market closes.

Gap-down stocks are stocks that show significant downward price movement in after hours or pre-market trading. Although stocks can gap down at any time, they are common during earnings season when a report that falls short of analysts’ expectations can trigger a wave of selling. Stock screening tools make it easy for investors to find gap-down stocks, but identifying which ones make good trading opportunities requires a bit more sophistication.

Gap prices can either reflect a full gap or a partial gap. And fit in one of four categories: A breakaway gap, an exhaustion gap, a common gap or a continuation gap. Knowing what type of gap is the key to successful trading.

Gap trading strategies require a disciplined system that includes the use of trailing stops at well-defined entry and exit points to limit loss and protect profits. Not every gap stop is ideal for trading. Investors need to pay attention to other technical indicators such as trading volume to decide whether or not a gap-down stock may produce a profitable trade.

Effective gap trading strategies are executed in the first hour after the opening bell. This is because the first hour will typically allow investors to see if the trend is sustainable and also to track areas of support and resistance that are critical when setting trailing stops. Trading gap-down stocks in many cases requires taking a short position, which can leave an investor more exposed to risk.

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