How to find fvg in trading

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Last updated: April 4, 2026

Quick Answer: FVG stands for Fair Value Gap, which is an imbalance in price within a trading chart, often represented by a gap between candlestick wicks. Traders identify FVGs to predict potential price reversals or continuations, using them as areas where price might return to fill the imbalance.

Key Facts

FVG represents a price imbalance on a trading chart.
It's often formed between the wick of one candle and the body of the next.
FVGs can signal potential areas for price retracement.
Traders use FVGs to identify potential entry and exit points.
The concept is part of the broader ICT (Inner Circle Trader) methodology.

What is a Fair Value Gap (FVG)?

A Fair Value Gap (FVG), also known as an inefficient price delivery or imbalance, is a concept frequently discussed in the trading community, particularly within the Inner Circle Trader (ICT) methodology. It represents a specific pattern on a price chart where there is a notable gap or imbalance between the high of one candlestick and the low of the subsequent candlestick, or vice versa. This gap indicates a period of rapid price movement where buying or selling pressure was so strong that it left a void in price discovery, meaning price moved quickly from one point to another without sufficient trading activity in between.

Think of it like this: in a perfectly efficient market, price would move smoothly and fill all the spaces. However, when there's an FVG, it suggests that price has moved too quickly in one direction, leaving an area where the market participants may not have had a chance to agree on a fair price. These gaps are often seen as opportunities for the price to return and 'fill' the imbalance, thereby restoring efficiency to that price range.

How to Identify Fair Value Gaps

Identifying an FVG on your trading charts involves looking for a specific three-candle pattern. You need to observe two candles and the space between them. There are two main types of FVGs:

Bullish FVG (or Imbalance): This occurs when the high of the first candle is higher than the low of the third candle, and the low of the second candle is higher than the high of the first candle. Visually, it looks like a gap downwards between the wick of the first candle and the wick of the third candle. The middle candle's body is often in the middle of this gap.
Bearish FVG (or Imbalance): This occurs when the low of the first candle is lower than the high of the third candle, and the high of the second candle is lower than the low of the first candle. Visually, it looks like a gap upwards between the wick of the first candle and the wick of the third candle. The middle candle's body is often in the middle of this gap.

The key is to look for a clear separation between the wick of the first candle and the wick of the third candle, with the second candle's body residing within this gap. Many trading platforms offer custom indicators that can automatically highlight these patterns on your charts, making identification easier.

Trading Strategies Involving FVGs

Traders utilize FVGs in various strategies, primarily as potential areas of interest for price to revisit. The underlying principle is that the market often seeks equilibrium, and these imbalances represent zones where price may eventually correct itself.

1. FVG as a Target for Retracement: A common strategy is to anticipate that price will move back into the FVG zone to 'fill' the imbalance. Traders might look to enter a trade in the direction of the prevailing trend once price has re-entered the FVG, expecting it to continue its move after the imbalance is resolved.

2. FVG as a Support or Resistance Level: Once an FVG has been formed, the boundaries of the FVG (the wick of the first candle and the wick of the third candle) can act as significant support or resistance levels. If price revisits an FVG, traders might use these boundaries to place stop-loss orders or to identify potential reversal points. For example, if price moves down and creates a bullish FVG, traders might expect this zone to act as support on a subsequent pullback.

3. FVG Confluence: FVGs are often more powerful when they align with other trading concepts. This includes confluence with:

Support and Resistance Levels: If an FVG forms near a known horizontal support or resistance level, it can strengthen the significance of that area.
Trendlines: An FVG that forms along a trendline can reinforce the trend's potential continuation.
Order Blocks: These are other areas on a chart where significant buying or selling occurred. An FVG near an order block can indicate a strong area of interest for institutional traders.
Market Structure Breaks (MSB): When price breaks through significant highs or lows, it can create FVGs that align with the new direction.

When trading FVGs, it's crucial to manage risk effectively. This means using stop-loss orders and position sizing appropriately, as no trading strategy is foolproof. FVGs are tools to increase the probability of a successful trade, not guarantees.

Limitations and Considerations

While FVGs can be a valuable tool, they are not a standalone trading system. Their effectiveness can vary depending on the market, timeframe, and overall trading strategy. It's important to remember that not all FVGs will be filled, and price can continue to move away from them. Therefore, combining FVG analysis with other technical indicators and risk management practices is essential for successful trading.