What is Fair Value Gap (FVG)?
Fair Value Gap (FVG) is an essential financial concept in foreign exchange trading within the Technical Analysis curriculum.
In Smart Money Concepts, a three-candle price imbalance where strong momentum leaves an unfilled pricing void between the wicks of candle 1 and candle 3.
Mastering Fair Value Gap (FVG) enables currency traders to structure risk, execute with high statistical probability, and align with institutional interbank order flow.
Why It Matters for Forex Traders
In forex trading, Fair Value Gap (FVG) is vital for understanding how market participants price risk and execute orders. Price action indicators, support and resistance, moving averages, RSI, MACD, and Smart Money Concepts.
How to Identify and Apply Fair Value Gap (FVG)
- 1Analyze the mathematical or technical structure of Fair Value Gap (FVG) on your trading platform.
- 2Confirm alignment with higher-timeframe market trends and active session liquidity (London/New York).
- 3Set predefined stop loss and take profit boundaries before executing any trade based on this concept.
Practical Forex Example
Always test strategies involving Fair Value Gap (FVG) in a trading journal or demo environment before risking live capital.