Core Concepts
Fair Value Gap (FVG) Trading: ICT Explanation
A Fair Value Gap (FVG) is commonly described in ICT education as a three-candle imbalance where the first and third candles do not overlap across the relevant wicks. Traders use the zone as one piece of a broader price-action setup.
Bullish FVG
A commonly used bullish FVG occurs when the low of the third candle is above the high of the first candle, leaving an intervening price area. Traders may mark that area and observe how price reacts if it returns.
Bearish FVG
A bearish FVG is the inverse: the high of the third candle is below the low of the first candle. The resulting area is marked as an imbalance zone.
FVG is not a complete strategy
An FVG by itself does not tell you direction, risk, position size or target. ICT traders often combine it with higher-timeframe context, liquidity, displacement and a defined invalidation point.
Testing FVG ideas
If you want to test an FVG model, define the exact timeframe, entry rule, invalidation, session, target and maximum risk before collecting results. This makes the test repeatable instead of selecting only attractive historical examples.
Worked example (hypothetical)
For a bullish three-candle FVG, a common ICT definition looks for the first candle's high to be below the third candle's low, leaving a visible interval between them. Decide how your chart feed handles equal prices, minimum gap size and partial fills. When price later revisits the interval, record whether it rejects, partially trades through or crosses the full gap. Do not count only the clean examples where price bounced. A revisit is an observation to classify, not a required future event.
FAQ: Does price always fill a Fair Value Gap?
No. Some gaps are revisited, some are only partially traded through and others remain open during the observation period. Define what counts as a fill and how long the test waits before classifying the gap.
FAQ: Is every three-candle gap a trade entry?
No. An FVG is a chart formation, not a complete trade plan. If a strategy uses it, define the timeframe, minimum formation criteria, market context, entry trigger, invalidation, target and maximum risk.
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