Gap days demand more preparation than flat opens. Arriving at your desk at 07:58 and hoping to figure it out as candles print is how traders misclassify gaps and draw ranges too early. This checklist takes about twelve minutes and covers the decisions that should be made before the bell.
1. Measure the gap
Calculate gap size as a percentage of the 14-day ATR. Under 40% of ATR suggests a common gap likely to fill. Above 80% suggests a breakaway or runaway scenario worth wider range expectations.
2. Identify the catalyst
Check overnight news, earnings releases, and sector peers. A gap without a catalyst on low pre-market volume behaves differently from a gap on an earnings beat with heavy ADR trading.
3. Review the prior day's structure
Was the stock consolidating, trending, or reversing? Gap type depends heavily on context. A gap up after five days of decline carries different implications than a gap up on day three of a rally.
4. Check pre-market volume
On UK stocks, pre-market liquidity is thin. Note whether the gap is holding or drifting in pre-market trading. A gap that shrinks before the open often becomes a common gap regardless of its initial size.
5. Write your bias and invalidation
Before 08:00, write one sentence: "Gap type: ___. Bias: ___. Invalidated if: ___." This takes thirty seconds and prevents mid-session rationalisation when price moves against you.
6. Set your range timer
Configure an alarm for 08:15. Until it rings, you are observing, not marking. This single habit eliminates the most common opening range error we see in coaching sessions.
Print this checklist and keep it beside your monitor for the first month. Once the steps become automatic, gap days will feel structured rather than chaotic. For hands-on practice, see our upcoming workshop dates.