overnight gap fade
In plain terms
When a stock opens with a big jump or drop versus the previous close, that move usually gets partly given back, so you bet on the reversal.
How it works
Overnight gaps (open vs prior close) overshoot on retail and news-driven order imbalance at the open and then partially reverse, the classic gap-fade / overnight-reversal effect. A large up-gap fades down and a large down-gap fades up.
Data dependencies
- Intraday features daily
A data feed this strategy reads, refreshed on its normal schedule.
- Daily prices
Adjusted-close OHLCV for every US-listed ticker; primary price feed.
Expected edge
Large overnight gaps overshoot and mean-revert, so faded gaps earn the reversal.
Related families
When a stock closes far away from its average traded price for the day, it tends to drift back toward that average.
On days when a stock's price swings unusually hard intraday, the move tends to be an overreaction that partly reverses the next day.
When a stock trades on unusually heavy volume, the day's move is often just liquidity noise that gets reversed the next day.
Explore overnight gap fade on alphactor.ai
See which tickers this family is currently firing on, with live signals and rankings.