Smart Money Concept / ICT
Fair Value Gap (FVG)
A three-candle price imbalance that markets often return to fill.
What is Fair Value Gap (FVG)?
A fair value gap (FVG), also called an imbalance, is an ICT and Smart Money Concept: a gap in traded prices left by a fast, one-sided move. It appears as a three-candle pattern where the first and third candles' wicks do not overlap, leaving an untraded zone in the middle.
How it works
In a bullish FVG, the low of the third candle stays above the high of the first candle, leaving a gap the middle candle blew through. Because price moved too quickly to trade fairly in that range, markets often return later to 'rebalance' it. Traders treat the gap as a magnet and a potential entry zone, especially when it lines up with an order block or a break of structure.
How traders use it
- ▸Entries: anticipate a reaction when price returns to fill the gap.
- ▸Targets: an unfilled FVG above/below can act as a price objective.
- ▸Confluence: strongest with an order block and break of structure.
- ▸Invalidations: a fully filled gap is no longer in play.
Build Fair Value Gap (FVG) without code in Algovex
Algovex's fair-value-gap node is a reference stateful detector: it finds bullish and bearish FVGs, tracks them from formation to fill, and renders them historically, not just the latest one. Wire fill or tap triggers into entries, backtest, and export the logic to code.
Works well with
Common mistakes
- ✕Trading every gap, most edge comes from FVGs with order-block or structure confluence.
- ✕Treating a filled gap as still active; once filled it's usually done.
- ✕Using tiny, noise-sized gaps; require a minimum (ATR-relative) size.
- ✕Ignoring the higher-timeframe bias and fading a strong trend.
Key parameters
| Parameter | What it does |
|---|---|
| minGapSize | Minimum gap size to qualify (absolute or ATR-relative). |
| fillMode | When a gap counts as filled (touch / 50% / full). |
| showInvalidated | Whether filled/invalidated gaps stay visible (dimmed). |
Frequently asked questions
Do fair value gaps always get filled?
No. Many FVGs are filled because price tends to rebalance fast moves, but some remain unfilled, especially in strong trends. That's why traders use them as zones of interest with confluence, not as guarantees.
What timeframe is best for fair value gaps?
FVGs appear on every timeframe. Higher timeframes produce fewer but more significant gaps; lower timeframes produce many. Algovex lets you detect and backtest them on any timeframe and instrument.