FAIR VALUE GAPS are a very useful concept in price action trading, as they provide a trader with information about where a lot of orders were injected creating this inefficiency in the market. This inefficiency can become a magnet for price in the future to resolve this inefficiency as there are many resting orders. A trader can use this information to target a fair value gap, or to look for a potential entry for a long/short making it a good POI.
With this strategy you are looking for large Fair Value Gaps. Wide/Tall Boxes = Larger Fair Value Gaps.
There's two ways to go about trading these liquidity grabs..
Methodology 1 (LONGS): Breakout
Trade these opportunities like a Breakout. You could set a limit at the LOW of the FVG and enter. You could let price break the low and retest the FVG.
Methodology 2 (LONGS): Volume confirmation
Use other indicators and confirmations to signal when the market might want to break through this FVGS.
Exiting: To each their own
With this strategy you are looking for large Fair Value Gaps. Wide/Tall Boxes = Larger Fair Value Gaps.
There's two ways to go about trading these liquidity grabs..
Methodology 1 (LONGS): Breakout
Trade these opportunities like a Breakout. You could set a limit at the LOW of the FVG and enter. You could let price break the low and retest the FVG.
Methodology 2 (LONGS): Volume confirmation
Use other indicators and confirmations to signal when the market might want to break through this FVGS.
Exiting: To each their own
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