ICT 2024 Mentorship \ How To Trade ICT FVGs Correctly \ September 16, 2024

Introduction

This tutorial is designed to guide you on how to trade using Inner Circle Trader (ICT) Fair Value Gaps (FVGs) effectively. Understanding FVGs is crucial for traders looking to improve their strategies in the financial markets. This guide will break down the process into actionable steps, ensuring you can apply these concepts in your trading.

Step 1: Understand Fair Value Gaps

• Definition: Fair Value Gaps are areas on a price chart where price has moved quickly, leaving a gap between candlesticks.
• Importance: These gaps can indicate potential areas of support or resistance, which traders can exploit.
• Observation: Look for gaps that occur after a significant price movement. These are more likely to be filled in the future.

Step 2: Identify FVGs on Your Chart

• Use Candlestick Charts: Ensure your trading platform allows for candlestick charting.
• Look for Gaps: Identify gaps between the close of one candlestick and the open of the next.
• Mark the Gaps: Use horizontal lines to mark the boundaries of the gaps on your chart.

Step 3: Analyze Market Context

• Trend Analysis: Determine the prevailing market trend (bullish or bearish) to assess the relevance of the FVG.
• Volume Confirmation: Check for an increase in volume during the gap formation as this indicates stronger market interest.

Step 4: Develop a Trading Plan

• Entry Points: Plan your entry around the FVG. Consider waiting for a price retracement to the gap before entering.
• Stop Loss Placement: Set your stop-loss just below the FVG for buy trades and just above it for sell trades. This helps manage risk.
• Take Profit Targets: Define clear take profit levels based on previous support/resistance or a risk-reward ratio.

Step 5: Execute the Trade

• Use a Trading Platform: Place your orders using your chosen trading platform.
• Monitor Price Action: Keep an eye on how price interacts with the FVG. Look for signs of rejection or confirmation of continuation.

Step 6: Review and Adjust

• Post-Trade Analysis: After closing your trades, review the outcomes. Analyze what worked and what didn’t.
• Adjust Strategy: Use insights from your trades to refine your approach to trading FVGs in the future.

Conclusion

Trading using ICT Fair Value Gaps can be a powerful strategy when executed correctly. By understanding the concept, identifying gaps, analyzing market context, and developing a solid trading plan, you can enhance your trading performance. Always remember to review your trades and adjust your strategy based on your experiences. Happy trading!