Fair value gap questions and answers
Short answers. Each links to a page that goes further.
What is a fair value gap?
On a price chart, a fair value gap is a three-candle pattern in which the wicks of the first and third candles do not overlap. The middle candle moved through that price range quickly, so little trading took place inside it.
What does fair value gap mean?
It is a trader's name for the space between the first and third candle wicks. The "fair value" part is a label for the idea that the market did not trade both ways there. It is not a measurement of value, and it is not the company valuation term.
What does FVG stand for?
FVG is short for fair value gap.
How do you find a fair value gap on a chart?
Look at three candles in a row. If the low of the third is above the high of the first, there is a bullish gap. If the high of the third is below the low of the first, there is a bearish gap. The gap is the range between those two wicks.
What is the difference between a bullish and a bearish fair value gap?
A bullish gap forms in a rising move, with the low of candle 3 above the high of candle 1. A bearish gap forms in a falling move, with the high of candle 3 below the low of candle 1. They are mirror images.
Does price always come back to fill a fair value gap?
No. Price sometimes returns to a gap and sometimes never does. A gap marks a zone that traders watch. It is not a promise of what price will do next.
What does it mean to fill or mitigate a gap?
Filling means price trades back into the gap range. A partial fill reaches part of the range and a full fill trades through all of it. Many traders use mitigation for the same return to the zone.
What is an inversion fair value gap?
It is a gap that price has closed through, which some traders then read as a zone of the opposite direction. Educators differ on what counts as closing through.
Is a fair value gap the same as an imbalance?
Many educators use the two words for the same idea, and some draw small differences. Check how a source defines its terms before comparing examples.
Which timeframe is best for fair value gaps?
The rule works on any timeframe. Gaps on higher timeframes cover more price and many traders give them more weight. No timeframe is shown here to be better, and this site makes no claim about results.
Is a fair value gap a trading signal?
No. A gap is a feature of the chart that some traders use as one part of a plan. It does not say which way price will go. Trading carries a risk of loss.
Are the charts on this site real?
Yes. Every market chart uses real 15-minute candles, and the gaps are found by the stated rule, not drawn by hand. Teaching pictures are labelled as diagrams, not market charts.