High Probability Fair Value Gaps (FVG) - 2024 MMFunded ICT Mentorship

Introduction

This tutorial provides a step-by-step guide on High Probability Fair Value Gaps (FVG) as discussed in the "High Probability Fair Value Gaps (FVG)" video by Jay Froneman. Understanding FVGs is crucial for traders looking to enhance their market analysis and trading strategies. This guide will break down key concepts, examples, and practical applications to help you grasp the material effectively.

Step 1: Understand Fair Value Gaps

• Definition of FVG: Fair Value Gaps are price discrepancies that occur when the market moves too quickly, creating areas where no trading has taken place. They often signal potential reversal points or continuation in price trends.
• Importance: Recognizing FVGs can help traders identify high-probability setups for entering or exiting trades.

Step 2: Identify Fair Value Gaps

• Observation: Watch for large price movements on a chart that create gaps. These can be identified by looking for:
  • Areas where candles do not overlap.
  • Sudden price spikes or drops that leave gaps.
• Chart Tools: Use candlestick charts for better clarity. Look for gaps between the close of one candle and the open of the next.

Step 3: Analyze Live Examples

• Example 1: Review a specific live example of an FVG presented in the video. Focus on:
  • How the gap formed.
  • The price action following the gap.
• Consequent Enroachment: This occurs when price revisits the FVG area. Note how traders can utilize this for potential entry points.

Step 4: Explore Inversion Gaps

• Definition: Inversion gaps occur when price reverses after filling a fair value gap.
• Example 2: Analyze another live example of an inversion gap. Pay attention to:
  • The conditions leading up to the gap.
  • The subsequent market reaction.

Step 5: Low Time Frame Entry Strategy

• Strategy Development: Focus on low time frame entries to increase trading precision.
• Tips for Execution:
  • Use lower time frames (like 1-minute or 5-minute charts) to find entry points when price approaches an FVG.
  • Confirm signals with volume analysis or additional indicators.

Step 6: Understand Volume Imbalance Gaps

• Definition: Volume imbalance gaps result from a disparity between buying and selling pressure, often leading to significant price movements.
• Application: Identify these gaps to spot potential trend reversals or continuations, providing further trading opportunities.

Conclusion

Understanding High Probability Fair Value Gaps is essential for traders aiming to refine their strategies. By following the steps outlined in this tutorial, including recognizing FVGs, analyzing live examples, and developing entry strategies, you can improve your market analysis skills. As you practice, consider seeking additional resources or mentorship programs to deepen your knowledge and enhance your trading success.