Fair Value Gap

When price moves fast, it leaves an imbalance: a gap between the wick of one candle and the wick of the candle two places later. Price often comes back to rebalance that gap before continuing.

The FVG strategy only uses gaps that follow a real break of structure, and enters with a limit order in the middle of the gap so the stop stays tight.

When it works

After a decisive break of structure in London or New York. Gaps that form in the middle of a range, without a break, are noise.

The setup

A break of structure with a strong displacement candle.

Common mistakes

• Trading every gap on the chart, with or without a break of structure.
• Chasing price when it doesn't come back to the gap.
• Placing the stop at the edge of the gap instead of beyond the swing.