Think about a trading method centered on FVG (Fair Value Gap) and would be happy if I could also create an EA. This time, I will write the basics about FVG.

What is FVG?
When a strong trend emerges in the market, large bullish or bearish candles appear. At such times, the momentum can be so intense that a “gap” or space that does not overlap can form between the previous candlestick and the next candlestick.

Among investors, there is a psychology that “the market will come back to fill this gap (similar to a gap-fill).” Therefore, FVG is very valuable as a reference for future pullbacks and rallies.

How to find FVG
FVG is judged by a sequence of three consecutive candlesticks.

Rising FVG (buy sign candidate)

First candlestick high

Second candlestick big bullish candle

Third candlestick low

If there is a gap between the “high of the first candlestick” and the “low of the third candlestick,” that gap is the FVG.

Falling FVG (sell sign candidate)

First candlestick low

Second candlestick big bearish candle

Third candlestick high

If there is a gap between the “low of the first candlestick” and the “high of the third candlestick,” that gap is the FVG.

Why is FVG important?
Institutional footprints: A large FVG cannot be formed by retail orders alone. The existence of an FVG is evidence that large players (banks and hedge funds) have a strong intent there.

A magnet-like role: Prices tend to retrace to fill FVGs. Therefore, the price range of an FVG tends to become a strong support or resistance.

High-precision entry point: Rather than “jumping in as soon as the price breaks through,” targeting the price that has retraced back to the FVG allows for risk-controlled trading.