Fair Value Gaps (FVG): The Complete Guide for ICT Traders

A fair value gap (FVG) — also called an imbalance or liquidity void — is one of the cleanest signatures of institutional aggression on the chart.

What Is a Fair Value Gap?

An FVG is a three-candle pattern where the wicks of candle 1 and candle 3 don't overlap, leaving a "gap" in the body of candle 2. That gap represents price the market moved through too quickly to deliver fair value — and price tends to revisit it later to "rebalance."

Bullish vs. Bearish FVGs

• Bullish FVG — gap is created during an up move; the unfilled space sits below candle 3's low. Price often pulls back into it before continuing higher.
• Bearish FVG — gap is created during a down move; the unfilled space sits above candle 3's high.

Trading an FVG Step by Step

1. Confirm higher-timeframe bias (use the framework in our SMC guide).
2. Find an FVG that formed off a fresh order block.
3. Wait for price to tap the FVG — the 50% midpoint (the "consequent encroachment") is the highest-probability entry.
4. Stop just beyond the protected order block; target the next liquidity pool.

FVG Mistakes to Avoid

Not every gap is tradable. Skip FVGs that form against the higher-timeframe trend, that have already been mitigated, or that sit inside extended consolidation. The Investopedia article on gaps is a useful broader reference for how gaps behave across asset classes.

FVGs become a real edge when you wire them into a system. Map the trigger conditions in AlphaFlow, then journal every fill so you can see which FVG variants — kill-zone FVGs, post-sweep FVGs, breaker FVGs — are paying you in your market.