ICT Fair value gap - How To Use Them
A Thread 🧵
A Thread 🧵
- Before I talk about how to use an FVG in different ways, I'll explain what it is and why it happens.
- There are two kinds of Fair Value Gaps (FVG):
- BISI stands for when there are more buyers than sellers, causing inefficiency on the selling side.
- SIBI stands for when there are more sellers than buyers, causing inefficiency on the buying side.
- There are two kinds of Fair Value Gaps (FVG):
- BISI stands for when there are more buyers than sellers, causing inefficiency on the selling side.
- SIBI stands for when there are more sellers than buyers, causing inefficiency on the buying side.
- A BISI happens when a Bullish FVG forms.
- A FVG consists of three candlesticks in a row.
- In a BISI pattern, the Bullish FVG starts with the highest point of the first candle, marking the lowest point of the FVG, and finishes with the lowest point of the third candle, representing the highest point of the FVG.
- A FVG consists of three candlesticks in a row.
- In a BISI pattern, the Bullish FVG starts with the highest point of the first candle, marking the lowest point of the FVG, and finishes with the lowest point of the third candle, representing the highest point of the FVG.
- A Bullish FVG forms when one candle's low doesn't touch the next candle's high, indicating a price gap.
- This happens due to a price difference between two candles.
- This happens due to a price difference between two candles.
- When candle number 2 only has buyers offering to the market, it's called a Buyside Imbalance.
- This imbalance happens because there's no selling side offered, creating a Sellside Inefficiency.
- This imbalance happens because there's no selling side offered, creating a Sellside Inefficiency.
Example of a Bullish FVG (BISI) :
- A Bearish FVG, or SIBI, starts at the low of candle 1 (FVG High) and ends at the high of candle 3 (FVG Low).
It happens when candle 3's high doesn't overlap candle 1's low due to candle 2's displacement.
It happens when candle 3's high doesn't overlap candle 1's low due to candle 2's displacement.
- The name Sellside Imbalance Buyside Inefficiency (SIBI) is given because in candle 2, only sellers offered their goods, leading to a Sellside Imbalance.
- This imbalance occurs when there is no demand from buyers, resulting in a Buyside Inefficiency.
- This imbalance occurs when there is no demand from buyers, resulting in a Buyside Inefficiency.
Example of a bearish FVG (SIBI) :
1. Whether an FVG is classified as a BISI or a SIBI depends on the color of candle 2.
2. BISI FVGs feature an upward closing candle for candle #2, while the color of candles 1 or 3 is irrelevant.
3. SIBI FVGs show a downward closing candle for candle 2, with the colors of candles 1 or 3 being inconsequential.
2. BISI FVGs feature an upward closing candle for candle #2, while the color of candles 1 or 3 is irrelevant.
3. SIBI FVGs show a downward closing candle for candle 2, with the colors of candles 1 or 3 being inconsequential.
Here are some Example how to trade FVG :
- Market structure shift (MSS)
- Using Premium discount array (PD array)
Example 1 : Using MSS
- Market structure shift (MSS)
- Using Premium discount array (PD array)
Example 1 : Using MSS
Example 2 : Using PD array
I use to trade @DeiFunded
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