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Price action · Guide

Fair Value Gaps (FVG): How to Spot Them & Journal Your Win Rate

Everyone draws Fair Value Gaps. Almost nobody tracks whether their FVG entries actually make money. Here's what an FVG is, how to identify it cleanly, and how to journal each setup so you stop trading them on vibes.

What is a Fair Value Gap?

A Fair Value Gap (FVG) — sometimes called an imbalance or inefficiency — is a three-candle pattern where price moved so aggressively in one direction that it left a range untouched. Buyers and sellers never auctioned that zone fairly, so theory says price is drawn back to "rebalance" it.

The pattern is purely mechanical. If the wick of candle 1 and the wick of candle 3 do not overlap, the body of candle 2 contains an FVG.

The 3-candle rule

  • Bullish FVG: the low of candle 3 is strictly above the high of candle 1. The gap is the zone between those two prices.
  • Bearish FVG: the high of candle 3 is strictly below the low of candle 1. The gap is the zone between those two prices.

Candle 2 is usually a large impulse candle — earnings, a news spike, a liquidity sweep, or a session open. The bigger candle 2 is relative to recent ATR, the more meaningful the imbalance.

How traders use FVGs

The common playbook has two flavors:

  1. Fade into the gap. Wait for price to retrace into an unfilled FVG in the direction of the higher-timeframe trend, then enter on confirmation.
  2. Trade the rejection. Mark unfilled FVGs as draw-on-liquidity targets. When price reaches the gap and stalls, take the reversal.

Stops typically sit just beyond candle 2's extreme. Targets are the next opposing FVG, swing high/low, or session liquidity pool.

Filters that matter

  • Timeframe: 15m and 1H FVGs hold up far better than 1m noise.
  • Confluence: FVG + prior swing + session open is stronger than a lone gap.
  • Freshness: the first tap of an FVG usually performs best; tap #3 is a coinflip.
  • Trend alignment: long bullish FVGs in uptrends, short bearish FVGs in downtrends. Counter-trend FVGs need extra confirmation.

Why you have to journal them

"FVGs always fill" is one of the most repeated half-truths in trading. The honest answer: your FVG setup, on your instrument, in your session, with your filters has a specific win rate — and you don't know it until you log it.

Track at minimum:

  • Timeframe of the FVG (5m / 15m / 1H / 4H)
  • Direction (bullish / bearish) and trend alignment
  • Tap number (1st / 2nd / 3rd touch)
  • Entry trigger used (limit at gap, confirmation candle, lower-TF structure)
  • R multiple result and whether the gap fully filled

After 30–50 logged FVG trades you'll see the truth: which variant prints, which one is a story you've been telling yourself.

Common mistakes

  • Drawing FVGs after the fact and ignoring the ones that didn't work.
  • Trading every gap instead of waiting for trend + confluence.
  • No stop beyond candle 2 — "it has to fill" is not a risk plan.
  • Mixing timeframes: entering on a 1m FVG against a 1H bearish trend.

FAQ

Do Fair Value Gaps always fill?

No. Many do, many don't. Treat fill as a probabilistic bias and let your own journaled stats set the expectation.

FVG vs order block — what's the difference?

An order block is the last opposing candle before an impulse. An FVG is the imbalance the impulse leaves behind. They often sit next to each other and stack as confluence.

Best timeframe for FVGs?

15m and 1H are the sweet spot for most intraday traders. Lower timeframes generate too many false gaps; higher timeframes are valid but rare.

Journal your FVG setups in BullaTrade

Replay real charts paused at the FVG, tag every entry, and let BullaTrade's rule engine prove your win rate setup-by-setup — not vibe-by-vibe.