Trading Strategies
Fair Value Gap
A three-candle imbalance where price moved so fast it left an untraded window; traders expect price to revisit the gap and often trade the fill or the reaction.
In plain English
A fair value gap (FVG) appears when a strong candle leaves space between the wicks of its neighbors: an imbalance where one-sided aggression skipped prices without two-way trade. The thesis is that markets tend to revisit these windows to build the missed liquidity.
Popular in smart-money-concepts trading, FVGs serve as entry zones on retracement (buy the dip into a bullish gap) and as targets when price travels toward an old gap. Like all zone tools they work best confluent with structure and session context rather than alone.
- NQ leaves a 20 point FVG in a breakout leg.
- Price retraces into the gap an hour later, holds its midpoint, and the trader enters long with a stop below the gap.