Curated by Andrew Lockwood, London Futures Exchange Veteran (35+ Years Exp)
The Fair Value Gap (FVG) is one of the most recognised price-action patterns. This pattern has been fundamental to many trading strategies, it has however, more recently has been popularised by ICT (Inner Circle Trader) and Smart Money Concepts trading. It’s used by retail and prop traders around the world to identify high-probability zones on a chart where price is likely to rebalance before continuing in its main direction.
At Funded Trading Plus, we teach traders how to apply this principle within a structured, rule-based framework. The goal isn’t to predict every move, but to understand how professional traders use price imbalance to plan disciplined, repeatable setups inside a simulated trading environment.
Watch the FVG Strategy Video
Watch Andrew Lockwood’s full walkthrough of the ICT Fair Value Gap trading strategy, including examples of bullish and bearish setups, real-time chart analysis, and step-by-step entries.
📄 [Download the PDF Guide]
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What Is the Fair Value Gap (FVG)?
A Fair Value Gap forms when price moves rapidly in one direction, leaving behind a visible gap between the first and third candles of a three-bar pattern. That gap represents an imbalance where not all buy and sell orders were matched.
The idea behind the ICT Fair Value Gap is that price will often return to “fill” that gap before resuming its main trend. Traders view these areas as potential retracement zones for entries or reversals.
FVGs can appear in all markets: forex, indices, commodities, and even crypto, but they’re most effective when used alongside broader Smart Money Concepts, such as market structure, liquidity sweeps, and order flow.
Why the ICT Fair Value Gap Is So Popular
The ICT trading approach focuses on understanding how institutional order flow creates movement in price. The Fair Value Gap became one of the most popular ICT concepts because it offers a visual, rule-based way to identify that flow in action.
Thousands of traders now use the ICT FVG strategy to define structure, identify precise entry zones, and align with the momentum of “smart money.” For prop traders at Funded Trading Plus, the method helps reinforce good habits, patience, confirmation, and risk control, rather than emotional or impulsive trading.
How to Spot Fair Value Gaps on Your Chart
You can identify FVGs manually or with a charting indicator. On platforms such as TradingView, search for “FVG” and you’ll find tools designed to highlight gaps automatically.
The Three-Candle Pattern
- Candle 1: The initial candle before the move.
- Candle 2: A strong impulse candle in one direction (the key move).
- Candle 3: The first candle after the move.
If the wick of Candle 1 and the wick of Candle 3 do not overlap, a Fair Value Gap has formed between them.
- In an uptrend, that gap forms below price and can act as future support.
- In a downtrend, it forms above price and can act as resistance.
The FVG Trading Strategy Step by Step
The FVG strategy is not about taking every gap you see. It’s about aligning three timeframes to create a clear plan: trend, zone, and entry.
Timeframe Structure
- Higher timeframe (4-hour or daily) – Identify the main market direction.
- Middle timeframe (1-hour) – Mark FVG zones created during pullbacks.
- Lower timeframe (15-minute or 5-minute) – Wait for price to revisit the 1-hour FVG and confirm with a clear entry pattern.
Confirmation and Entry
Look for a bullish engulfing candle, bearish engulfing candle, or a pin bar inside the Fair Value Gap as confirmation. This shows that price has reacted to the imbalance and is resuming in the direction of the main trend.
Stops and Targets
- Stop loss: beyond the middle FVG candle (below for buys, above for sells).
- Target: 2:1 or 3:1 risk-to-reward, or use market structure points such as prior highs or lows.
Why Prop Traders Use the FVG Strategy
Prop traders at Funded Trading Plus often use the Fair Value Gap strategy to stay structured within their evaluation and funded programs.
The concept helps traders:
- Follow rules rather than emotions.
- Align trades with broader trend direction.
- Identify low-risk retracement entries during pullbacks.
- Manage drawdown more consistently.
Because our programs run in a simulated environment with virtual funds, the focus is on skill development, consistency, and decision-making, not speculation or prediction.
Quick Tips for Trading FVGs
- Choose strong trending markets, avoid sideways conditions.
- Let price revisit the FVG zone before reacting.
- Wait for confirmation on your lower timeframe.
- Keep risk small and consistent across trades.
Backtest your rules before applying them.
Download the FVG Strategy PDF Guide
Download the Fair Value Gap (FVG) Strategy PDF to keep a copy of the rules and chart examples. The guide is free to access and designed for educational use.
📄 [Download the PDF Guide]
Common Questions About the ICT FVG Strategy
No. Market behaviour varies. It’s essential to test and adapt the concept for each instrument and timeframe.
No. Combine FVGs with market structure and confirmation to avoid false signals.
Not exactly. Both come from ICT Smart Money Concepts, but order blocks mark institutional entry zones, while FVGs show areas of imbalance that price may revisit.
Yes, many funded traders use FVG setups to stay consistent and disciplined, especially when managing drawdown and evaluation targets.
Ready to put these insights into practice? A disciplined strategy requires an evaluation built to reward consistency. At Funded Trading Plus, we offer simulated programs designed to suit every style of trader. You can explore our streamlined one step challenge for complete trading autonomy, opt for our traditional two step evaluation if you prefer a structured, phased approach, or discover our instant funding program with no profit targets to begin trading a simulated funded account immediately. Choose the path that best fits your goals and test your edge in our simulated trading environment today.
Important Educational Disclaimer
All content on this page is for educational purposes only.
It is not financial advice or an invitation to trade.
All examples use simulated trading data in a simulated environment with virtual funds.
Past performance does not guarantee future results.
Always do your own research before applying any trading concepts in live markets.