The Only Fair Value Gap Video You Need.

Introduction

This tutorial will guide you through the concept of Fair Value Gaps (FVGs) in trading, as explained in TJR's video. Understanding FVGs is essential for making informed trading decisions, especially in the context of smart money strategies. This guide simplifies the concept, making it accessible for traders at all levels.

Step 1: Understanding Fair Value Gaps

• Fair Value Gaps represent areas on a price chart where there is an imbalance between supply and demand.
• These gaps occur when a price moves quickly, leaving behind a space where there was little to no trading activity.
• The presence of an FVG can indicate potential reversal points or areas where price may return to fill the gap.

Step 2: Identifying Fair Value Gaps on a Chart

• Use candlestick charts to visually identify FVGs.
• Look for instances where:
  • A strong price movement occurs.
  • A gap is formed between two candlesticks.
• Ensure that the gap is at least three candlesticks wide for it to qualify as a significant FVG.

Step 3: Analyzing the Market Context

• Evaluate the overall market trend before placing trades based on FVGs.
• Consider the following aspects:
  • Are you in a bullish or bearish market?
  • How does the FVG align with key support and resistance levels?
• This context will help you determine whether to trade in the direction of the gap or against it.

Step 4: Trading Strategies Using Fair Value Gaps

• Entry Points:
  • Enter trades when the price approaches the FVG.
  • Look for confirmation signals such as reversal candlestick patterns.
• Stop Loss Placement:
  • Place stop-loss orders just outside the FVG to minimize risk.
• Profit Targets:
  • Set profit targets based on previous support and resistance levels.

Step 5: Common Pitfalls to Avoid

• Do not blindly trade every FVG; always consider the market context.
• Avoid trading during high-impact news events that can cause volatility.
• Be cautious of false breakouts where the price may not return to fill the gap.

Conclusion

Fair Value Gaps can be a powerful tool in your trading arsenal when understood and applied correctly. By identifying and analyzing these gaps, you can make more informed trading decisions. Remember to always consider the market context and use proper risk management strategies. As you practice trading FVGs, you'll develop a better intuition for when and how to leverage these gaps effectively. Explore additional resources and consider joining mentorship programs to further enhance your trading skills.