Fair Value Gap (FVG)
A Fair Value Gap (FVG) is a three-candle imbalance where the middle candle moves so quickly that the wick of the first candle does not overlap the wick of the third — leaving an unfilled zone that price tends to revisit.
What it measures
For a bullish FVG, the low of candle 3 is above the high of candle 1 — the middle candle jumped past the previous range without filling in. The gap zone runs from candle 1's high to candle 3's low, and remains "open" until price trades back through it.
Parameters
| Name | Default | Range | Note |
|---|---|---|---|
| min_gap_atr | 0.5 | 0.1–2.0 | Minimum gap size relative to ATR. Filters out tiny imbalances that are just noise. |
| fill_type | 50% | 25%, 50%, 100% | How much of the gap must be traded through before it is marked "filled". 50% is the ICT default; 100% is a stricter closure. |
How it behaves
FVGs act as magnets — price seeks liquidity in unfilled zones and frequently returns to at least the 50% level. Bullish FVGs in an uptrend often act as support on retracement; bearish FVGs in a downtrend act as resistance. The larger and more recent the gap, the stronger its pull.
When it misleads
Small FVGs form all the time and most are noise — filter by ATR-relative size. Gaps in strong directional moves may not fill for many sessions, so trading "the fill" without a trigger can mean sitting through weeks of drawdown. And on news candles, FVGs are simply the range of the news reaction — treating them as high-probability support/resistance ignores that the imbalance is information, not inefficiency.
Backtest result
Sourced backtest in preparation — we're running the rule on our own historical candles before publishing numbers we can stand behind.
FAQ
- Are FVGs the same as price gaps?
- No. Traditional gaps are between the previous close and the next open (weekends, overnight). FVGs are intra-session three-candle imbalances that can happen on any timeframe without a session break.
- What is the ICT FVG rule?
- From ICT (Inner Circle Trader) methodology: enter when price returns to the FVG in the direction of the higher-timeframe bias, target the next liquidity pool. The 50% level of the FVG is a common entry reference.
- Do FVGs work on all timeframes?
- Yes, but their reliability scales with timeframe. Daily FVGs are respected far more consistently than 1-minute FVGs, which form and get filled constantly.
Build a strategy with FVG
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