Dear ,
Welcome to Day 5 of our technical series.
Today, we’ll talk about something that looks fancy,
But it is actually very simple once you understand it:
Fair Value Gaps (FVG)
Most traders use it wrongly.
But once you learn the correct way,
FVGs give very clean entries and help you avoid bad ones.
Let’s make it super simple.
DAY 5 TOPIC: Fair Value Gaps (FVG)
An FVG is just an imbalance in the market.
It means:
Price moved so fast in one direction
that it didn’t trade fairly on the way.
This creates a small empty space on the chart.
Whenever the market leaves an imbalance,
it usually comes back to fill that gap.
That “fill” gives you a very clean entry.
How to identify an FVG
Look for three candles:
For a Bullish FVG (Price wants to go up):
- Candle 1 - big bullish candle
- Candle 2 - another bullish candle
- Candle 3 - leaves a gap between Candle 1’s high and Candle 3’s low
This empty space = Bullish FVG
Price likes to come back and fill it before moving up again.
For a Bearish FVG (Price wants to go down):
- Candle 1 - big bearish candle
- Candle 2 - another bearish candle
- Candle 3 - leaves a gap between Candle 1’s low and Candle 3’s high
This empty space = Bearish FVG
How to use FVG for entries
- Mark the FVG zone
Just mark the small gap with a box.
- Wait for the price to return to the zone
No need to chase.
Just wait.
- Enter when the gap is filled + rejection candle appears
That’s your precise entry.
- Stop-Loss
Below the FVG (for long)
Above the FVG (for short)
- Targets
- Target 1 - next structure (Swing)
- Target 2 - previous high/low
RR is usually very good because FVG entries are tight.
Why FVG works
Because:
- This is where institutions left orders
- Price comes back to “balance” the move
- This level creates a clean reaction
- Retail traders usually miss this entry
- But you’ll catch it easily now
Now, Backtest in the Chart
Open your 5-minute or 15-minute chart.
Zoom out a little.
Look for:
- a fast move (up or down)
- a small “empty area” between candles
Mark it.
Wait for the retest.
You will clearly see how the price reacts from that zone.
I can also make a video on this topic. Reply to this email in case if you face difficulties understanding.
With Love and Respect
Samir
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