[Part 8] 2 Candle FVG / 3 Candle FVG & how to quickly determine Bias on any timeframe!

Step-by-Step Tutorial: Understanding Gaps and Determining Bias in Trading

1. Understanding Gaps in Trading:

   • Gaps in trading represent instances where a large institution influences the market, leaving behind visible footprints on the charts.
   • The truest form of a gap is a physical gap where the price jumps forward without leaving any price action behind.

2. Types of Gaps:

   • True Gap: A gap where there is a clear absence of price action between two areas on the chart.
   • Two Candle Fair Value Gap: Occurs when a candle breaks out of the previous candle, indicating a lack of fair value in that area.
   • Three Candle Fair Value Gap: Involves three candles and signifies a more confirmed bullish or bearish bias.

3. Identifying Gap Types:

   • Look for areas on the chart where there is a clear absence of price action (true gap).
   • Identify two candle fair value gaps by observing a breakout from the previous candle's high or low.
   • Three candle fair value gaps require confirmation through the involvement of three candles.

4. Trading Strategies for Gaps:

   • Two Candle Fair Value Gap Trading:
     • Anticipate a price retracement back into the gap followed by a continuation in the direction of the gap.
     • This strategy provides a faster indication of bias but may require caution as price reversals are still possible.

5. Determining Bias with Gaps:

   • If the low of a bullish two candle fair value gap is not broken or the high of a bearish gap is not broken, the bias is likely to continue in that direction.
   • Monitor the formation of two and three candle fair value gaps to understand and anticipate market bias changes.

6. Applying Bias Determination in Trading:

   • Use the concept of fair value gaps to quickly determine bias on different time frames.
   • Consider multi-time frame analysis to get a comprehensive view of market bias and potential trading opportunities.

7. Recap of Gap Types:

   • True Gap: Absence of price action between two areas.
   • Two Candle Fair Value Gap: Breakout from the previous candle indicating lack of fair value.
   • Three Candle Fair Value Gap: Involves three candles and signifies a more confirmed bias.

8. Utilizing Bias Determination for Trading:

   • Anticipate price movements based on the formation of fair value gaps and use them as signals for potential trade setups.
   • Leverage the information on bias determination to trade with or against the market bias effectively.

9. Future Considerations:

   • Stay informed about market bias changes using fair value gaps and adjust your trading strategies accordingly.
   • Consider the signals provided by trading bots to enhance your trading decisions based on bias determination.

10. Continued Learning:

    • Explore the multi-time frame nature of bias determination to refine your trading approach and capitalize on market opportunities effectively.

By following these steps and understanding the concepts of gaps and bias determination in trading, you can make informed decisions and improve your trading strategies based on market insights.