[00:00] going on in trading space right now. And there s a reason for that &nbsp; Because of how well they work in the market. But not all fair value gaps are created equal. &nbsp; And this fair value gap did end up working. So why did this fair value gap work&nbsp;&nbsp;
[00:19] secret technique I use to instantly tell&nbsp; me when a fair value gap becomes valid. &nbsp; And once you add this technique to your&nbsp; arsenal, you will instantly see your&nbsp;&nbsp; fair value gaps become more accurate. To begin, we first have to go over what&nbsp;&nbsp;
[00:35] a fair value gap actually is. We can have bullish fair value&nbsp;&nbsp; gaps and bearish fair value gaps. A fair value gap is simply when price moves up&nbsp;&nbsp; quickly. Creating this humongous green candle. The price moved up so quickly, that it actually&nbsp;&nbsp;
[00:50] didn t give sellers enough time to counteract the&nbsp; movement. Creating an imbalance in the market. &nbsp; You can mark a fair value by simply marking&nbsp; the candles top wick before the big move,&nbsp;&nbsp;
[01:03] to the candles lower wick after the big move. This zone is the fair value gap itself. &nbsp; Often times price will come back down to&nbsp; this zone, fill the imbalance, and retrace&nbsp;&nbsp;
[01:17] and profit off this move. But if you ve ever traded&nbsp;&nbsp; fair vale gaps before, you ll quickly&nbsp; notice, it doesn t work 100% of the time. &nbsp;
[01:29] This is because you ve probably&nbsp; traded an invalid fair value gap. &nbsp; But what makes a fair value gap valid? Well, theres actually 6 key factors that need&nbsp;&nbsp; to be true in order for a fvg to be valid. The first one is the fair value&nbsp;&nbsp;
[01:43] gap must be unmitigated. What I mean by that is since the whole&nbsp;&nbsp; point of a fair value gap is to have price surge&nbsp; and not give the opposite side a chance to react. &nbsp; This zone must not be tested&nbsp; in order for it to work. &nbsp;
[01:57] Price came back down to it directly after. Then continued to rise. &nbsp; So if price comes back down to this zone again. We would not consider this fair value gap&nbsp;&nbsp;
[02:09] valid as its already been tested here. If you want a fair value gap to be valid, it must&nbsp;&nbsp; we shouldn t trade around it. Moving on to point number two. &nbsp; The 2nd way to see if a fair value gap is&nbsp; valid is by making sure to check the reaction&nbsp;&nbsp;
[02:24] of the candle inside the fair value gap. We want the reaction of the candle to either&nbsp;&nbsp; close inside of the fair value gap or for&nbsp; it to close in the direction of the zone. &nbsp; So here, the candle broke through the fair&nbsp; value gap and ended up closing below the gap. &nbsp;
[02:39] If this happens, this makes the gap invalid. What we want to see is something like&nbsp;&nbsp; this. Where price close in the fair&nbsp; value gap. Giving us a safe entry. &nbsp; It s okay if a wick goes through&nbsp; the fair value gap like this,&nbsp;&nbsp;
[02:51] but ends up closing inside the gap. As long as the candle is closing&nbsp;&nbsp; inside the gap or in the direction of&nbsp; the gap. We are good for an entry. &nbsp; One way to make sure you are trading a strong&nbsp; fair value gap is by adding other confluences. &nbsp;
[03:07] So here on the chart, price made an&nbsp; untested bullish fair value gap. &nbsp; But if we look closely we can see&nbsp; price created a support over here. &nbsp; And it also just so happens to be right&nbsp; in the middle of the fair value gap. &nbsp;
[03:23] This is a great confluence and will raise&nbsp; the chances of this value gap to work. &nbsp; Same thing with bearish value gaps. You want to find a prior resistance that&nbsp;&nbsp; you gaps a lot stronger. Moving onto factor number four. &nbsp;
[03:38] As I was saying before, some fair value gaps are&nbsp; stronger than others and have more priority. &nbsp; An easy way to do this is to mark the fair&nbsp; value gaps by where they are on the chart. &nbsp; The lowest fair value gap will always be&nbsp; strongest and have the highest priority. &nbsp;
[03:55] While the highest fair value gap will be&nbsp; the weakest and have the lowest priority &nbsp; So in a perfect scenario, you should try to&nbsp; trade the lowest fair value gap possible. &nbsp; Same thing with bearish value gaps. If you have multiple bearish fvgs on one chart. &nbsp;
[04:09] This will really help your chances&nbsp; of find the one that works. &nbsp; Moving onto factor number 5. Factor number 5 goes along with factor number 4. &nbsp; What you want to do is go on a tradingview&nbsp; and pick this gann box tool right here. &nbsp;
[04:26] Go to the settings of it and make sure&nbsp; the price levels are 0, 0.5, and 1. &nbsp; If you have multiple fair value gaps on a&nbsp; chart, just grab this tool and mark from the&nbsp;&nbsp;
[04:39] low of the move, to the high of the move. This will give you an easy way to see what&nbsp;&nbsp; you should not be trading any fair value gaps&nbsp; that are in the upper portion of this tool. &nbsp;
[04:51] You only wan to be trading gaps that&nbsp; are in the lower portion of this tool. &nbsp; You only want to be trading fair values&nbsp; that are in the upper portion of this tool. &nbsp; If you follow this step you will only be&nbsp; trading high priority fair value gaps. &nbsp;
[05:06] Moving onto the 6th and final factor. But before that, I m about to share&nbsp;&nbsp; every time I enter a trade. I share my analysis&nbsp; on the specific trade and why I m entering. &nbsp;
[05:19] I send this email every Wednesday and Friday&nbsp; and there are some absolute gems about the&nbsp;&nbsp; shared last week which up 27%. The best part is, its absolutely free to&nbsp;&nbsp;
[05:32] sign up and you can cancel anytime. No catch. If you want to sign up, I ll leave a&nbsp;&nbsp; link to in the description. Go check it out. Okay lets go back to the 6th and final step. When trading fair value gaps, you should have&nbsp; a break of structure before the gap is made. &nbsp;
[05:45] A break of structure is simply when price&nbsp; breaks the high low, that it previously made. &nbsp; So in this example, price created a fair&nbsp; value gap, but it did not create a break&nbsp;&nbsp; of structure because it did not break this&nbsp; high. So we would not trade this gap. &nbsp;
[06:00] What we want is something like this. For&nbsp; bullish fair values, price should break&nbsp;&nbsp; the high it previously made, and while doing&nbsp; so it, it will probably create a fair value&nbsp;&nbsp; gap. This gap will now be valid because&nbsp; it did a break of structure of this high. &nbsp;
[06:13] of the previous low before creating the gap. If you combine all 6 of these steps together,&nbsp;&nbsp; it will create the ultimate fair value gap. And will greatly increase the chance of&nbsp;&nbsp;
[06:26] respecting this zone so you can profit from it. So here is a live a trade example of doing so. &nbsp; First we see made price made this high, so&nbsp; this will be our break of structure point. &nbsp; We wait and make sure price breaks this&nbsp; high so we have a break of structure. &nbsp;
[06:40] Next, we wait for a fair value gap to be created. We then make sure this fair value gap is&nbsp;&nbsp; unmitigated and hasn t been touched before. So in this example, we are good so far. &nbsp; That way we can see which&nbsp; gaps we should be targeting. &nbsp;
[06:56] We then grab our gann box tool and&nbsp; mark from the low to the high. &nbsp; so we can remove this gap from our chart&nbsp; as we don t want to be trading it anyway. &nbsp;
[07:08] And if we look closely, we can also&nbsp; see there is a support that just so&nbsp;&nbsp; all of the criteria of being a valid value gap. We wait for price to come down to this zone. &nbsp;
[07:20] Once it reaches this zone, we make sure the candle&nbsp; either closes in the zone or above the zone. &nbsp; Which in this example, price did exactly that and&nbsp; is starting to show that it respects this zone. &nbsp; All 6 of our criteria is met and we now&nbsp; know this is a valid gap and has a great&nbsp;&nbsp;
[07:36] of the move and set our stop loss at the low&nbsp; of the candle that made the fair value gap. &nbsp; And just as we expected price boomed&nbsp; right after touching the fair value gap&nbsp;&nbsp;
[07:48] and it gave us a beautiful winning trade. Combine all 6 of these steps together and&nbsp;&nbsp; Hope you got some value from this&nbsp; video. See ya next time.