Fair Value Gap (FVG) — Trading Wiki

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Published by TradeHQ. Site creator: Anuga Weerasinghe. This page has no recorded editorial review date; the About page explains the site's editorial approach.

What Fair Value Gap (FVG) means

A Fair Value Gap is a three-candle chart pattern where the wicks of the first and third candles do not overlap. The range need not be revisited and does not establish economic fair value or unfilled orders.

In depth

A Fair Value Gap (FVG) is a chart label used in Smart Money Concepts (SMC) and Inner Circle Trader (ICT) frameworks for a non-overlapping range in a three-candle sequence. It does not directly measure market efficiency or remaining orders. Structurally, an FVG is defined by a three-candle sequence where the wicks (shadows) of the first and third candles do not overlap, creating a visible gap in price on the chart. The candle pattern alone cannot show which participants traded or establish that only buyers or sellers were active. An upward FVG is labelled when the high of candle one and the low of candle three do not overlap.

The label does not reveal unfilled orders or prove future demand. A bearish FVG forms during a strong downward move: the low of candle one and the high of candle three do not overlap, creating a supply zone. The chart label does not establish economic fair value or a market-efficiency violation. An apparent gap can depend on the selected observations, aggregation interval and data source. No quantified probability of a revisit or trend continuation is established by the gap itself; both fills and unfilled gaps occur. The selected candles and timeframe affect which ranges are labelled as gaps; the label does not measure predictive reliability.

Volume and price movement describe the observed sample; their presence does not establish a future response to the marked range. A longer candle interval aggregates more observations, but it does not identify the size or intent of institutional orders. Several chart labels can overlap at the same price range; that overlap is not independent evidence of a profitable trade. A later revisit can be recorded alongside ranges that remain unvisited. Other candle labels describe additional observations; calling them confirmation does not establish a profitable entry or a reliable future response.

Key points

• Created by a 3-candle sequence with non-overlapping wicks
• Labels a non-overlapping candle range that need not be revisited
• Not a validated entry rule or guarantee that a gap will fill

Why it matters when you are learning

Identify the three candles and the non-overlapping price range. Compare examples where price revisits the range with examples where it does not; a gap need not fill or act as support.

Practising Fair Value Gap (FVG) on the simulator

Use the simulator as an observation exercise for Fair Value Gap (FVG). The main feature to identify is: Created by a 3-candle sequence with non-overlapping wicks. A second feature to compare is: Labels a non-overlapping candle range that need not be revisited. A third feature to note is: Not a validated entry rule or guarantee that a gap will fill. The presence of the concept is not a prediction or a trade signal. Educational simulation only — not financial advice.