Advanced Entry Strategies: Fair Value Gap (FVG)

Introduction

• The video introduces an advanced trading setup called Fair Value Gap (FVG) using smart money techniques.
• Applicable across currency trading, stock trading, and crypto due to consistent price action.
• Importance of understanding and following systematic steps before backtesting or trading.

What is Fair Value Gap?

• Defined as the space between the wicks of three consecutive candles on a price chart.
• Bullish Scenario: Upper wick of the first candle doesn’t overlap with the lower wick of the third candle.
• Indicates a buy-side imbalance due to significant buy pressure over selling pressure.
• Market inefficiency often leads to price returning to the FVG area.

Importance of Identifying FVG

• Signals participation of big players and potential leftover orders.
• Identifies trading opportunities when price re-enters FVG zones.

Practical Application

• Example on the Euro Dollar 1-Hour Chart:
  • Identifying sell-side imbalances and observing price returning to FVG.
  • Sharp downward moves create FVG, followed by pullbacks and rejections.

Concepts of Refining FVG

• Refine by scaling down to lower time frames (e.g., daily to 4-hour chart).
• Refining helps in identifying overlapping FVG zones for potential trades.

Trading During News Events

• Major news can create sudden FVGs, requiring caution and risk management.
• Importance of staying updated with economic news and using tools like FastB for analysis.

Choosing FVG Zones

• Prioritize FVG zones located in the discount (below 50% retracement) for buys and premium for sells.
• Avoid areas prone to liquidity traps.

Trading Plan Overview

• Two Major Time Frames: Higher (for general analysis) and Lower (for confirmation and entry).
• Use combinations like 4-hour/15-minute to execute trades.

Analyzing Market Structure: Higher Time Frame

• Identify direction using market structure concepts: Break of structures, liquidity sweeps, and key levels.
• Key levels include liquidity areas and potential reversal points.

Execution: Lower Time Frame

• Wait for confirmation after price enters identified zones.
• Look for reversal signals such as liquidity sweeps and character changes.

Real Chart Examples

• Euro Dollar 1-Hour Chart:
  • Downtrend followed by liquidity sweep and change of character.
  • Valid FVG area identified in the premium side for potential trades.
• Gold 1-Hour Chart:
  • Identified FVG on premium side for short trades.
  • Demonstrates potential for both successful and losing trades.

Conclusion

• Emphasizes importance of following a solid risk management plan.
• Encourages learners to stick to trading rules to mitigate losses.

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