Thread on Fair Value Gaps (FVG) & How To Use Them🧵
1) What is this system based off? This system is based off Fair Value Gaps which is a concept from
@I_Am_The_ICT
Before you learn FVG's, you need to understand what an imbalance is.
@I_Am_The_ICT
Before you learn FVG's, you need to understand what an imbalance is.
2) What is an imbalance?
An imbalance is when the market makes an AGGRESSIVE move in one direction
The move happens when the market gets too many buy orders or sell orders to cause an aggressive move to one side.
An imbalance is when the market makes an AGGRESSIVE move in one direction
The move happens when the market gets too many buy orders or sell orders to cause an aggressive move to one side.
Once you undertand imbalances, you are ready to learn what a FVG is.
What is a FVG?
A fair value gap is a 3 candle pattern.
This is when price creates an IMBALANCE between two candles.
The gap between the two wicks before and after the imbalance create the gap.
What is a FVG?
A fair value gap is a 3 candle pattern.
This is when price creates an IMBALANCE between two candles.
The gap between the two wicks before and after the imbalance create the gap.
Here is an analogy to understand FVG's.
Say you are painting a wall.
You put your brush into a lot of paint.
You quickly roll the paint on your wall, and move it super fast.
It will leave gaps behind.. what do you do? You go back over the gap with paint.
Say you are painting a wall.
You put your brush into a lot of paint.
You quickly roll the paint on your wall, and move it super fast.
It will leave gaps behind.. what do you do? You go back over the gap with paint.
Just like the painting analogy.
Market moves too fast, gaps are left behind, they move back into them and continue in the direction they were going.
Market moves too fast, gaps are left behind, they move back into them and continue in the direction they were going.
3) Why do fair value gaps work?
Fair Value Gaps work because the gap on the chart represents unfilled orders.
For a Bullish FVG, the buyers orders moved the stock price too fast and were not able to fill their entire order.
So when it comes back to the gap, it will bounce
Fair Value Gaps work because the gap on the chart represents unfilled orders.
For a Bullish FVG, the buyers orders moved the stock price too fast and were not able to fill their entire order.
So when it comes back to the gap, it will bounce
4) Fair Value Gaps Checklist:
There are rules to have in place before taking a FVG.
Only take FVG's on pullbacks in a trend.
Only take FVG's if the price action is bouncing or rejecting a FVG.
And see where liquidity lies before you take a FVG (thread coming soon)
There are rules to have in place before taking a FVG.
Only take FVG's on pullbacks in a trend.
Only take FVG's if the price action is bouncing or rejecting a FVG.
And see where liquidity lies before you take a FVG (thread coming soon)
5) Example of trade
Here we spot a FVG.
We also see EQH formed.
We form a plan that we wait for a pullback to FVG for possible buy opportunity.
Here we spot a FVG.
We also see EQH formed.
We form a plan that we wait for a pullback to FVG for possible buy opportunity.
6) Entering a trade
Now that you see the market is bouncing, you can form an entry, stop loss, and target.
Always aim for 2r trade.
Meaning for every 1 dollar you risk, you look to make 2.
Now that you see the market is bouncing, you can form an entry, stop loss, and target.
Always aim for 2r trade.
Meaning for every 1 dollar you risk, you look to make 2.
7) Let trade play out.
Everything between your stop loss and target is noise.
You can see how the trade plays out after pulling back into the FVG.
Everything between your stop loss and target is noise.
You can see how the trade plays out after pulling back into the FVG.
If you gained any value from this thread, feel free to Retweet the original tweet and follow me
@ShinobiSignals
If you have any questions, comment them and tag me and I will help out!
@ShinobiSignals
If you have any questions, comment them and tag me and I will help out!
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