What is Fair Value Gap (FVG)?
Fair value gap is area between first candle high and third candle low (bull FVG) where price skipped — potential revisit zone.
Indian market context (NSE)
Reference levels: Nifty 50 at 24,300, Reliance Industries at ₹1,300, Bank Nifty futures at 55,000 (lot size 30). Examples below show how Fair Value Gap (FVG) shows up on Indian index, equity, and futures books — update to live quotes in your journal.
Nifty 50 perspective
Fair Value Gap on Nifty (24,300): on the 15-minute chart, combine with session VWAP and 9:15–10:00 liquidity — index fair value gap signals misfire on expiry Tuesdays without volume confirmation.
Reliance Industries perspective
Fair Value Gap on Reliance at ₹1,300: daily vs hourly settings diverge around results and ex-dividend dates; note corporate events in journal when fair value gap readings spike.
Bank Nifty futures perspective
Fair Value Gap on Bank Nifty futures (55,000): first-hour signals differ from post-14:30 behaviour; avoid standalone entries when banking names lead the move.
How to validate
- Forward-test Fair Value Gap (FVG) on paper or sim for two weeks after rule changes.
- Validate only on trades where Fair Value Gap (FVG) settings matched the written playbook.
- Split results by trending vs range weeks on Nifty before trusting the signal.
- Require higher-timeframe bias agreement if that is part of your rule.
How to track in TradeLyser
- Add Fair Value Gap (FVG) reading to trade entry notes (value + timeframe).
- Create tags: “Fair Value Gap (FVG) aligned” / “Fair Value Gap (FVG) ignored”.
- Monthly: filter trades by alignment tag and compare win rate and avg R.
- Screenshot chart context for mentor review on disputed trades.
Best practices
- Combine Fair Value Gap (FVG) with higher-timeframe bias — not as a lone trigger.
- Avoid curve-fitting settings on less than three months of tagged data.
- Refresh playbook screenshots when changing Fair Value Gap (FVG) parameters.
- Skip trading when Fair Value Gap (FVG) conflicts with written risk limits.
Common pitfalls
- Treating Fair Value Gap (FVG) as a guaranteed reversal signal.
- Optimising parameters on one bullish month only.
- Trading against higher-timeframe bias because Fair Value Gap (FVG) “said so”.
- Failing to log when you overrode Fair Value Gap (FVG) discretionally.
How to use this in TradeLyser
Mark FVG on chart save; note timeframe and fill percentage at exit.
Related terms
Market structure break occurs when price violates prior swing high/low confirming shift in HH/HL pattern.
Order flow studies live transactions, bid/ask changes, and aggression to infer short-term pressure.
Price action trading uses raw price structure — highs, lows, patterns, and context — over lagging indicators.
Supply zone: area before drop; demand zone: area before rally — base for reversal/continuation.
FAQ
FVG on illiquid stocks?
Gaps less meaningful — prefer Nifty liquid.
All FVGs equal?
Size and context filter — log rules.
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