Nine out of ten people who lose in FVG do not look at the "color"
“I entered with FVG, but it retraced again and I got stopped out.”
The cause might be that you didn’t actually look at the “three colors” before drawing the line.
FVG (Fair Value Gap) is
a state where the second of three candles extends widely, creating a gap between the wicks of the first and third candles.
Many people only worry about the “size of the gap” or its “location,” but what truly separates whether it will work is only the combination of colors of those three candles.
If you thought, “Is it really that simple?” honestly, a lot of people overlook this. I used to look only at the gap shape and frequently experienced the same kind of losses.
So why do so many people miss such a simple difference?
The reason is that they look at the gap as a single “dot” and do not consider the surrounding colors as the “context.”
I will explain the concrete usage of this judging rule, common failure patterns in practice, and the reasons it works from a large trader’s psychology, and finally provide a practical checklist for implementation.