What is Fair Value Gap (FVG)?
Fair Value Gap (FVG) is a core concept in currency trading.
In Smart Money Concepts, a three-candle price imbalance where strong momentum leaves an unfilled pricing void between the wicks of candle 1 and candle 3.
Understanding Fair Value Gap (FVG) helps you manage your risk and spot high-probability trade setups.
Why It Matters for Forex Traders
In forex trading, Fair Value Gap (FVG) helps you protect your capital. It gives you a clear rule to follow instead of guessing.
How to Identify and Apply Fair Value Gap (FVG)
- 1Spot and mark Fair Value Gap (FVG) on your chart during active trading hours.
- 2Check that the overall market trend agrees with your trade idea.
- 3Always place a protective stop loss before entering any position.
Practical Forex Example
For example, on a EUR/USD trade, applying Fair Value Gap (FVG) allows you to set clear entry and exit points before risking real money.
PRO TRADER TIP
Always test strategies involving Fair Value Gap (FVG) on a free demo account first before trading with real capital.