Way to spot a valid Fair Value Gap(FVG)

[fighter2627]

Only one fair value gap is valid here, the check or the middle one. Why?
lets look at all three.


First the upper one, It looks clean but it sits in the premium zone, above the 50% level of the range
Before the last swing low and the last swing high. that means price is expensive. In premium we only look for sells not buys.
so, we ignore that one.


Now the lowest fair value gap. Look carefully, it sits below the last higher low of the trend, if price falls that deep, that's a Change of Character(choch), and its
structure shifts, when no longer looking for buys. So, we ignore that one too.

That leaves the middle FVG,  which is above the last higher low, meaning structure still bullish. and its in the discount zone, below the 50%equilibrium level.
this means the price is cheap. this is where we look to enter.


Not too high, not too deep. Just aligned with structure and price positioning.Personal opinion: You shouldn't trade all fair value gaps. Context decide which one is valid

What is Fair Value Gap?

Disclaimer: this is for educational purposes only not a financial advice. If you have any question or some other idea you are free to ask and share it here as well.

[Zaguru12]

Aside marking out your fair value gap, this doesn’t translate to your trade usually going in your favour, the price can still come back to fill this fair value gap and still not go in same direction likd you, some traders use Fibbonacci retracement indicator which is not bad but also doesn’t guranteed the market will still obeys.

Even after spotting a fair value gap your candle that fills it actually tells you if the market will respect the value gap because obviously you can have more than one fair value gap in a super bullish market move or super bearish market move. But what I look out at is that the candle coming into the fair value gap, if it’s a strong rejection candle which fails closes below 50% level of the FVG plus it takes out previous candle low. Then I look at the market reaction in lower time frame before entering (15m time frame)

So spotting an FVG doesn’t mean that’s a buy or sell zone, look for other factors to help build your confluence

[Rruchi man]

You shouldn't trade all fair value gaps. Context decide which one is valid

Understanding the concept of a fair value gap can increase your chances of being profitable in trading.

But truthfully that is not all you should know because there are still some other concepts in trading that you need to master and have knowledge of so that you can be able to spot them when the market gives such opportunities or such indications. For instance, you need to be conversant also with liquidity zones, order blocks, and market structure too.

You will be a better trader with all this knowledge. In trading, you have to learn a lot but somehow still find a way to keep it all simple.

[BitMaxz]

This is not how I determine which one is a valid FVG or not.
Well, we have different ways to know which one is valid or not, but how exactly do you validate if the FVG is invalid or not?

For me, I use the fixed volume profile here to determine those valid FVGs, or I manually check the volume where there is a large spike or candle but not much volume. Those, for me, are valid gaps, but it is way simpler if you use a volume profile to easily spot them.

[Dr.Bitcoin_Strange]

Fair value gap is part of the confluence I look for to validate any of my trade entry, while learning about fair value game in trading Bitcoin or any other crypto, it's also wise to understand that most times, even a valid fair value gap does not hold but rather gets violated. So, while using it as your confluence in trading, you must watch to see how price is going to react in that gap before you take your trade. Learning this one should also come along with learning valid order blocks.

[JeffBrad12]

Personal opinion: You shouldn't trade all fair value gaps. Context decide which one is valid

I always consider FVG to be the next stop for the current price action and isn't factor that determine it will go up or down.
If I see the candle is forming bearish pattern, next resistance will probably be around the lower price FVG and that could be a good price to take profit if you are shorting.

More often than not the price will show a sign of trend reversal around biggest FVG.

[Mpamaegbu]

Aside marking out your fair value gap, this doesn’t translate to your trade usually going in your favour, the price can still come back to fill this fair value gap and still not go in same direction likd you, some traders use Fibbonacci retracement indicator which is not bad but also doesn’t guranteed the market will still obeys.

That's why it should be mandatory for traders not to neglect using Stop Loss. Every mentor should tell their mentees that. Market has a mind of its own, like they say. It doesn't always do what you think it should do, even when it gives us that clarity of what it wants to do. Just like birds, price doesn't fly straight.

Understanding the concept of a fair value gap can increase your chances of being profitable in trading.

Understanding concepts is thoeritical while trading itself is practical. Only when what is understood is put to practical reality, with emotions completely put under control, that a trader can become profitable. Without that, that knowledge is a waste.

[Byebyebtc]

To me it all depends on the condition of the market, in forex nothing is scripted Evey thing works with conditions, and those conditions are based on satisfaction of the market,
If the market is satisfied, movement become smooth, but if the market is not satisfied movement becomes choppy and also risky to trade

So the goal is not just about fvg, thread line, Oder block etc .. the goal is about understanding and knowing when the market is satisfied before you can choose to enter at the already flowing price

And the satisfaction I'm talking about is balancing of price by taking out stop losses (liquidity) so that large Oders can be taken out by institutions without causing chaos and spike.
This is something that has to be studied by all forex trader that are serious about it

[AVE5]

You shouldn't trade all fair value gaps. Context decide which one is valid

Understanding the concept of a fair value gap can increase your chances of being profitable in trading.

But truthfully that is not all you should know because there are still some other concepts in trading that you need to master and have knowledge of so that you can be able to spot them when the market gives such opportunities or such indications. For instance, you need to be conversant also with liquidity zones, order blocks, and market structure too.

The concept of the Fair Value Gap can't be profitable if only traders are relying their trading strategies specifically by it without considering other strategies because, the volatility concept of the market mostly moves irrational and trajectories.
So a lot of knowledges is required for traders to acquire in order to figure several means to place their trades just to catch the candle at the spot even as volatilities remains unpredictable.
And let's also not forget that this FVG is imbalanced and price might also not be retraced after intensity trend moves.

[rat03gopoh]

This is not how I determine which one is a valid FVG or not.
Well, we have different ways to know which one is valid or not, but how exactly do you validate if the FVG is invalid or not?

If op was faced with an actual chart, perhaps he would determine a different fvg point. That's what some experts say, that there is no technical analysis method that can truly be used as a universal reference. People only look for forms that can be said to be a pattern that they can consider valid with their own intuition.

[Alphakilo]

Fair value gap is part of the confluence I look for to validate any of my trade entry, while learning about fair value game in trading Bitcoin or any other crypto, it's also wise to understand that most times, even a valid fair value gap does not hold but rather gets violated. So, while using it as your confluence in trading, you must watch to see how price is going to react in that gap before you take your trade. Learning this one should also come along with learning valid order blocks.

There's really so much to learn and use at ones discretion when trying to make the best out of trading and FVG knowledge is just one of those important things to learn among others.

The FVG on any platform for trading you use might entail a trader to require this knowledge during a specific timeframe window to trade and am sure AI tools can even help make this known after setup and coding, so as to detect them before entering a trade.
The bottom line as concerns FVG application during trading is to understand how to lookout out for the main features like timeframe, weak gap, location and candle size in order to detect if the FVG is weak/invalid or strong/valid.