What you will learn
- Find a Fair Value Gap on the chart from three candles
- Tell a filled imbalance from one that is still live
- Understand why price returns to an imbalance zone
- Build a trade from an FVG: where to enter, where the idea is invalidated
What is a "fair value" gap?
The market loves equilibrium: buyers and sellers trade at every level. But sometimes price rips so sharply that some levels are skipped almost without trades — a gap, an imbalance, remains. The market considers this price "unfair" and often tends to return there to "fill in" what was skipped — but not always: in a strong trend the imbalance can stay unfilled. Our job is to spot such zones in advance.
Analogy. A staircase where someone jumped three steps. Sooner or later they'll have to come back and step on them.
What an FVG is made of — poke the candles
A classic FVG is three candles. Tap each marked point to learn its role. Open all three to complete the step.
- Candle 1
- Its high is the lower boundary of the gap
- Impulse
- The strong candle that rips price
- Candle 3
- Its low is the upper boundary of the gap
This is an exercise from the lesson. You can run it on a live chart in the terminal, where progress is recorded.
Try it on the chartHere it is on a real chart
The demo below is a deterministic scenario with the fvg indicator on. The violet box is the imbalance zone the indicator found automatically between the wicks of the first and third impulse candles.
Click on the imbalance
Now on your own. Find the FVG and tap it. Hint: the gap is always after a strong impulse candle.
Bullish or bearish?
The imbalance on the chart formed on a rise: the low of the third candle is above the high of the first. What kind of FVG is this?
This is an exercise from the lesson. You can run it on a live chart in the terminal, where progress is recorded.
Try it on the chartPlay with the size filter
Drag the slider — small insignificant gaps get filtered out. This way you tune the indicator to your style and remove noise.
Long or short?
Price pulled back down to the bullish imbalance and touched it. By FVG logic the zone works as support. Where does it make more sense to look for an entry?
This is an exercise from the lesson. You can run it on a live chart in the terminal, where progress is recorded.
Try it on the chartBuild an FVG trade
Put the steps in the correct order — click them one by one.
- Wait for a strong impulse
- Find an unfilled FVG
- Wait for price to pull back into the zone
- Enter on the reaction off the zone
This is an exercise from the lesson. You can run it on a live chart in the terminal, where progress is recorded.
Try it on the chartCheck off what you've learned
- I understand the three-candle imbalance
- I tell a bullish FVG from a bearish one
- I know where to look for an entry at the zone
- I can set the gap size
This is an exercise from the lesson. You can run it on a live chart in the terminal, where progress is recorded.
Try it on the chartWhy price returns to an imbalance
Normal trading looks like an exchange: at every level there are both buyers and sellers, and trades happen in both directions. A sharp impulse breaks that balance — price races through a range with almost no opposing orders, because one side sweeps everything in its path. The levels inside such a move were, in effect, never traded.
That is inconvenient for a large participant: their size cannot be filled across a stretch price flew past. So price comes back to those zones — not by magic, but because unfilled interest remains there. Hence the practical rule: an imbalance is interesting while it is unfilled, and stops being a reference the moment price trades back through it.
How to find an FVG: three candles and one gap
The mechanics are simpler than they sound. Take three consecutive candles in the direction of the impulse. If the low of the third candle sits above the high of the first (in an up move), a gap remains between them — and that is the Fair Value Gap. In a down move it is mirrored: the high of the third sits below the low of the first.
The middle candle is usually large — it is the impulse itself. If its size is comparable to its neighbours, the gap is most likely incidental and not worth attention.
After that one criterion matters: whether the imbalance has been filled. If price has already returned into the zone and passed through it, the zone is spent. If it entered only partway, some interest is still there and the level remains live. Unfilled imbalances on higher timeframes can last for weeks.
Timeframes and signal quality
FVGs exist on every timeframe, but their value differs by an order of magnitude. On a one-minute chart dozens form every day and most are filled within half an hour — you can trade them, but it is scalping with a high share of noise.
The working range for most people is 15 minutes to 4 hours. An imbalance on H4 that formed on a news release and stayed unfilled is a reference point for several days ahead.
One note on the time of day: an imbalance formed in thin liquidity — the Asian session, the weekend — is markedly less reliable. There a gap often means not large interest but simply an absence of orders in the book.
Trading an FVG and the usual mistakes
The sequence is always the same: wait for a strong impulse, find an unfilled imbalance inside it, wait for price to pull back into the zone, and enter on the reaction from it rather than on the touch. Invalidation is natural: if price passes through the zone and holds beyond it, the idea no longer applies.
The first common mistake is entering the moment price touches the edge of the zone, without confirmation. An imbalance is an area, not a point, and price often runs it to the far edge.
The second is trading every gap you find. There are many imbalances on a chart, but the ones worth attention formed on a pronounced impulse and coincide with a level that already meant something.
The third is ignoring the context of the move. An imbalance against a strong higher-timeframe trend performs noticeably worse than one with the trend: the return to the zone happens, but the continuation does not.
Frequently asked questions
- What is a Fair Value Gap in simple terms?
- A stretch of price the market moved through so fast that almost no opposing trades occurred. It appears as a gap between the wicks of the first and third candle of an impulse. Price often returns there later.
- How does an FVG differ from an order block?
- An order block is the specific candle an impulse started from — the area where a position was built. An FVG is the gap inside the impulse itself, the area of skipped trading. They often sit close together and reinforce each other, but they are different objects.
- Does price always return to an imbalance?
- No. A return is likely but not guaranteed: in a strong trending move some imbalances stay unfilled for a long time. That is why an FVG is a zone of interest and anticipation rather than an entry signal by itself.
- Which timeframe should I look for FVGs on?
- The practical range is M15 to H4. On minute charts there are too many and they fill quickly; on daily charts they are rare but carry the most weight.
Other lessons in this track
Terms covered
This material is educational and is not individual investment advice.