Scribd
Upload
791 views8 pages

Understanding Fair Value Gaps in Trading

The document discusses the concept of a Fair Value Gap (FVG), which is a price range where one side of market liquidity is offered that creates a gap or void in liquidity on lower timeframes. An FVG can be identified by a three candle formation where the gap between the candles remains unfilled. The document provides an example of a bearish FVG and explains how an FVG is created due to imbalance between buy and sell-side liquidity. When an FVG forms, price action within the gap region is expected to eventually trade back into the area to fill the void.

Uploaded by

StatusPedia
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
791 views8 pages

Understanding Fair Value Gaps in Trading

The document discusses the concept of a Fair Value Gap (FVG), which is a price range where one side of market liquidity is offered that creates a gap or void in liquidity on lower timeframes. An FVG can be identified by a three candle formation where the gap between the candles remains unfilled. The document provides an example of a bearish FVG and explains how an FVG is created due to imbalance between buy and sell-side liquidity. When an FVG forms, price action within the gap region is expected to eventually trade back into the area to fill the void.

Uploaded by

StatusPedia
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

FVG

II
Guide

Educational Trade Guide by Trader Daan


What is it?

FVG I
Fair Value Gap is a range
in price delivery where
one side of the Market
Liquidity is offered and
typically confirmed with a

I
liquidity void on the lower
time frame charts in the
same range of price. Price
can actual “gap” to create
a literal vacuum of trading
thus posting an actual
Price Gap.
Balance

I
I

I often make the


comparison with a scale.
When a scale is in balance
the two plates will hang
right next to each other.
When one of the plates
contain more weight, we
will identify an imbalance.
This also occurs in the
market. When we have
more participants on one
side of the market, a FVG
will be created.
How to identify an FVG?

This is the candle


that comprises the
FVG.
The low to the close
offered Buy Side
Liquidity.

The open to the high


offered Buy Side
Liquidity.

In the picture above you can see an example of a bearish


FVG. The FVG is annotated with the blue shaded area. The

I I
FVG is identified by a three-candle formation. The leftover
gap between the two candles is the Fair Value Gap. When a
gap occurs one a higher timeframe it is expected to see a
liquidity void to be created when you zoom in on the lower
timeframe of that same region.
“We refer to a Bearish FVG as SIBI
and a Bullish FVG is called BISI”

SIBI = Sellside Imbalance Buyside Inefficiency


BISI = Buyside Imbalance Buyside Inefficiency
When a Fair Value Gap is
created only one side of the
market was able to deliver price.

I
The leftover gap contains
porous price action. What we
expect is that price eventually
wants to trade back into the
area of the Fair Value Gap.

I What to expect?

v
Source
I

Inner Circle Trader


I

Did you like the


content?
I
If you liked this type of content, please consider
signing up with my referral link on PrimeXBT:
[Link]

By signing up with this link you help me with


I

making content, and when you use the code


“TDNL” you get a 7% deposit bonus up to $7000.

If you have any further questions feel free to send


a DM!

You might also like