What is a Fair Value Gap (FVG)?
A Fair Value Gap (FVG) is a concept used in Smart Money Concepts (SMC) to identify imbalances in the market where price moved too quickly. It leaves a gap between the wicks of the first and third candles in a three-candle sequence. Institutional traders anticipate price returning to these zones to "fill" the imbalance before continuing the trend.
How to Spot an FVG on Your Chart
To identify an FVG manually:
- Look for a strong, impulsive candlestick (the second candle in the sequence).
- Check the high of the first candle and the low of the third candle (in a bullish scenario).
- If they do not overlap, the empty space between them is the Fair Value Gap.
Pro Tip: Using our Premium FVG Indicator, these zones are automatically highlighted on your MT4 or MT5 charts as soon as the third candle closes, ensuring they never repaint.
Get the Premium IndicatorPrecise MT4/MT5 Entry Rules
Bullish FVG (Buy Setup)
- 1. Identify Trend: Ensure higher timeframe (e.g., H4) is bullish.
- 2. Wait for FVG: Look for a bullish FVG on your trading timeframe (e.g., M15).
- 3. Retracement: Wait for price to retrace and tap the FVG zone.
- 4. Confirmation: Look for a lower timeframe market structure shift or pin bar inside the FVG.
- 5. Entry & Exit: Enter Buy. Stop Loss below FVG. Target next liquidity pool.
Bearish FVG (Sell Setup)
- 1. Identify Trend: Ensure higher timeframe is bearish.
- 2. Wait for FVG: Look for a bearish FVG on your trading timeframe.
- 3. Retracement: Wait for price to rally up into the bearish FVG zone.
- 4. Confirmation: Wait for a bearish rejection or market structure shift.
- 5. Entry & Exit: Enter Sell. Stop Loss above FVG. Target previous swing low.
Best Settings for FVG Indicator
For MT4/MT5, we recommend enabling the "Extend Lines" option so the FVG zones project forward until they are mitigated (filled) by price. Set the timeframe filter to show H1 FVGs on your M15 chart for high-probability setups.
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