Easy Fair Value Gap Strategy!!!

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Dear Traders

What are fair value gaps?

Different names for the idea of a fair value gap are used by price action traders. Some refer to it as a liquidity hole, imbalance, or inefficiency. They happen when strong pressure from both buyers and sellers causes prices to fluctuate quickly and significantly. These changes in the market, whether they are bearish or bullish, produce gaps, which are the foundation of the FVG approach. To an FVG. When the price closes the gap, consider a short sell.

The foundation of the FVGs idea is the conviction that the market would eventually rectify itself.

How to spot fair value gaps?

The FVG is based on a three-candlestick formation that causes an imbalance in the price movement of the market, in contrast to other gaps on a price chart where there is no trading activity. The FVG is the space left between the wicks of the first and last candles when this significant move abruptly happens, either upward or downward.

How to trade Fair Value Gaps?

You'll be able to determine when and where to enter and quit a trade once you know how to see a fair value gap on a price chart.

We will demonstrate how to apply this FVG trading technique in this section, as the second way is thought to be more dependable. Thus, this is how you trade it:

1. Identifying the Trend

Use longer time intervals, like 1 hour, daily, and weekly, if necessary. Trend lines and trend channels can also be used to determine the trend of the market.

2. Determining the Zones of Supply and Demand

Finding supply and demand zones or order blocks that match the trend follows trend identification. The easiest way to draw supply or demand zones is with the first FVG candle.

3. Finding the entry points using FVG

We must now determine how the fair value gap arose. You can automatically identify FVGs with Lux Algo's Fair Value Gap Indicator on TradingView. The example below shows bearish supply zones closest

4. Setting a target profit and stop loss

Risk management is crucial to any trading plan. Set realistic target profit and stop loss levels when trading FVG. If you trade from the supply zone, place your stop loss above the first candle of the FVG three-candle formation. This protects your capital if the market moves against you.

Set your take-profit target above the next demand zone in your trade direction. This area suggests a market turning point where you can lock in profits.

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