What is an iFVG?
Summary
TLDRThis video offers a step-by-step guide on trading using the 'inversion Fair Val Gap' strategy, which involves identifying gaps in candlestick charts where wicks do not overlap. The presenter shares their success with this method, earning over $3,000, and explains the difference between bullish and bearish gaps. They advocate for a contrarian approach, waiting for the gap to be violated before trading, and demonstrate this with examples on lower time frames. The video concludes with an invitation to join a Discord community for further discussion and learning.
Takeaways
- 📈 The speaker made over $3,000 using an 'inversion Fair Val Gap' trading strategy and offers to teach it step by step.
- 🔍 A Fair Val Gap (FVG) is identified by a lack of overlap between the wicks of the first and third candles, creating a 'gap' in price.
- 🐻 A bearish FVG is indicated by the first candle's wick not overlapping the third candle's wick, suggesting a downward price movement.
- 🐃 A bullish FVG is the opposite, where the wicks do not overlap, indicating an upward price movement.
- 🚫 The speaker advises against the common approach of shorting a bearish FVG or going long on a bullish FVG, as it often leads to traders getting stopped out.
- 🔄 Instead, the speaker waits for the FVG to be violated, i.e., the price trades and closes beyond the gap, signaling a potential trend reversal.
- 🕒 The strategy is best applied on lower time frames, such as the 5-minute chart, rather than the hourly chart.
- 📊 The speaker uses the strategy to identify potential entries by looking for a violation of a bearish or bullish FVG, followed by a confirmation signal.
- 🎯 For entry, a stop loss is set below the low of the FVG, and take-profit targets are set at significant highs or lows, aiming for a risk-reward ratio of 1.3 to 3.29.
- 📉 In a bearish example, the speaker waits for a close below the previously held FVG, indicating a potential bearish entry.
- 📈 The speaker emphasizes mastering the entry technique along with a narrative and bias as key to market success and offers further resources through a Discord link.
Q & A
What is a Fair Val Gap (FVG) in trading?
-A Fair Val Gap (FVG) is a hidden gap in price where the wicks of the first and third candles do not overlap, indicating a break in the price continuity.
How is a bullish FVG different from a bearish FVG?
-A bullish FVG occurs when the wicks of the candles do not overlap, creating a hidden gap that suggests a potential upward price movement. Conversely, a bearish FVG indicates a potential downward price movement.
What does the term 'inefficiency' refer to in the context of FVGs?
-Inefficiency is another term for a gap or a FVG, referring to the price discontinuity that occurs when the wicks of consecutive candles do not overlap.
What is the traditional approach to trading a normal FVG?
-The traditional approach is to long a bullish FVG and short a bearish FVG, looking for a bounce in the case of a bullish gap and a rejection in the case of a bearish gap.
What is the opposite strategy mentioned in the script for trading FVGs?
-The opposite strategy involves waiting for a FVG to be violated, i.e., for the price to close above a bearish gap or below a bullish gap, indicating a potential reversal of the expected direction.
What is the significance of the price closing above or below a FVG?
-When the price closes above a bearish FVG or below a bullish FVG, it suggests that the market is likely to move in the opposite direction of the gap, indicating a potential entry point for a trade.
What time frame does the speaker prefer for trading inverse FVGs?
-The speaker prefers using the 5-minute time frame for trading inverse FVGs, rather than the hourly time frame.
How does the speaker determine the entry point for an inverse FVG trade?
-The entry point is determined when the price closes above a bearish gap or below a bullish gap, confirming the violation of the FVG.
Where does the speaker suggest placing the stop loss for an inverse FVG trade?
-The stop loss is typically placed below the low of the candle that closed above the bearish gap or above the high of the candle that closed below the bullish gap.
What is the potential risk-reward ratio the speaker targets in an inverse FVG trade?
-The speaker targets a risk-reward ratio of around 1.3 R for the first take-profit level and 3.29 R for the second take-profit level.
How does the speaker use the concept of 'narrative' and 'bias' in conjunction with inverse FVG trading?
-The speaker suggests that mastering the entry with a narrative and a bias, in addition to the inverse FVG strategy, can help traders to better understand and navigate the markets.
What additional resources does the speaker offer for those interested in learning more about trading strategies?
-The speaker offers a free Discord link with over 15,000 members where people trade the same strategies discussed in the video, as well as potential free classes and further information in the video description.
Outlines
📊 Inversion Fair Value Gap Trading Strategy
The speaker introduces a trading strategy based on the concept of 'Fair Value Gaps' (FVGs), which are price gaps where the wicks of the first and third candles do not overlap, forming a hidden gap. The video aims to teach viewers how to replicate the speaker's successful trades that earned over $3,000. The speaker explains the difference between a bearish and bullish FVG and how they can be identified on a chart. The strategy involves trading in the opposite direction of common FVG trading advice, waiting for the gap to be violated before entering a position. The speaker prefers to use this strategy on shorter time frames, such as the 5-minute chart, and provides an example of a bullish FVG being violated, leading to a profitable trade.
📉 Advanced Entry Techniques for Inverse Fair Value Gaps
This paragraph delves deeper into the trading strategy for inverse Fair Value Gaps, focusing on entry and exit points. The speaker discusses the importance of waiting for confirmation that a FVG has been violated before entering a trade, using the example of a bearish gap that was closed above, indicating a bullish trend. The stop loss is typically placed just below the gap, and the take-profit targets are set based on the risk-reward ratio. The speaker also provides a bearish example, explaining how to identify a valid FVG and when to enter a trade after the gap has been held and then violated. The paragraph concludes with an invitation to join the speaker's Discord community for further learning and discussion on this trading strategy.
Mindmap
Keywords
💡Funded Account
💡Inversion Fair Val Gap
💡Gap
💡Bullish Gap
💡Bearish Gap
💡Efficiency
💡Rejection
💡Bounce
💡Violation
💡Stop Loss
💡Risk Reward
💡Momentum
💡Discord
Highlights
Introduction to making over $3,000 on a funded account using the inversion Fair Value Gap strategy.
Explanation of what a Fair Value Gap (FVG) is, using a Google example to show hidden gaps where candle wicks do not overlap.
Identification of bearish and bullish Fair Value Gaps based on candle wick patterns, demonstrating non-overlapping wicks creating hidden gaps.
Use of the terms 'inefficiency' and 'Fair Value Gap' interchangeably in trading contexts.
Description of what does not constitute a Fair Value Gap, showing overlapping candle wicks as a non-gap example.
Common trading strategy for Fair Value Gaps: longing bullish gaps and shorting bearish gaps, and why the speaker chooses to do the opposite.
Example of waiting for a bearish Fair Value Gap to be violated before taking a trade, using an hourly timeframe.
Importance of using lower timeframes, like the 1-5 minute charts, for implementing the inversion Fair Value Gap strategy.
Detailed walkthrough of a bullish Fair Value Gap example, highlighting how non-overlapping wicks indicate a bullish setup.
Explanation of taking trades after a bearish Fair Value Gap gets violated and closes above, predicting higher price movement.
Strategy for stop loss placement: using a stop loss just below the Fair Value Gap or near a recent low to improve risk-reward ratios.
Visualization of how price action accelerates when traders betting against the Fair Value Gap get liquidated, causing rapid price movements.
Description of a bearish Fair Value Gap example, showing how price closes below the gap after initially holding, signaling a bearish trade opportunity.
Discussion on the possibility of waiting for price retraces for entry, and how to target obvious price lows for covering positions.
Emphasis on mastering the inversion Fair Value Gap strategy along with a market narrative and bias to consistently succeed in trading.
Encouragement to join the free Discord community with over 15,000 members, to learn and discuss the same trading strategies.
Transcripts
I made over $3,000 on a funded account
trading my inversion Fair Val Gap
strategy and in this video I'm going to
teach you step by step on how you can
take the same exact trades that I did
now if we look on Google what a faap is
this is the picture of what it looks
like and basically it's this hidden Gap
where the first candle and the third
candle of their Wicks do not overlap
meaning the wick here and the wick here
do not come down and overlap each other
and it creates something called a gap
right here Gap in price same thing with
our here this is a bearish gap this red
candle because this first candle this
Wick does not come all the way down and
overlap this if we take a look at some
examples on the chart an example of a
fair value Gap would be something like
this because you can clearly see this
Wick here if I zoom let me just zoom in
a little bit this Wick here does not
overlap this Wick here so it creates
this hidden Gap in price and this is
considered a bearish fair value Gap now
let's take a look at an example of
something that would be a bullish fair
value Gap so an example of a bullish fa
rail Gap would be something like here
where you can clearly see there's a wick
here and a wick here and you can see
they don't overlap so it creates this
bullish hidden Gap in price and another
thing that these can go go by is an
inefficiency an inefficiency is another
name for a gap or a fair value Gap and
you can use these terms
interchangeably now what does it look
like when a fair Valley Gap is not
created well it looks like this right
here okay if you can see this this first
candle's a wick and this third candle is
a wick you can see that the low of this
Wick clearly overlaps the high of this
Wick okay you can see this is not a gap
there's no there's no Gap here because
this candle trades above the low of this
candle okay and you can just see there's
just no Gap here versus here this first
candle does not trade above this third
candle therefore it creates that Gap
like I said before now when people
typically trade a normal fre Val Gap
such as this you're looking for a
rejection off of a bearish r Val Gap so
we're looking for rejection off this and
off a bullish fre Val Gap you're
typically looking for a bounce because
most Traders learning what a fair valy
Gap is they are taught to long a bullish
for Gap and short a bearish for Gap so
what do I do well I do the opposite
because most Traders fail so I actually
wait for the fair Val Gap to get broken
through or violated and a great example
happened actually this Friday this was a
bearish for Gap it was very very obvious
you can see the first candle's Wick here
does not overlap the third candle wick
here and what I kind of waited for is I
waited for price to trade above and I
waited for the candle to close Above
This bearish Gap so I waited for this
candle right here to close above the Gap
and what does that tell me that tells me
that price should go higher why because
here's the thing when people are
learning fairvale gaps they think oh I'm
going to short this Gap here and what
happens is they short it and you can see
we kind of Wick down but then we end up
going back up and this is where people
they get stopped out and they reverse
their position and all their shorts get
liquidated and this is when price tends
to really start to accelerate or move
faster the other way and this is when I
usually take the trade so my strategy is
basically that I basically wait for a
bearish gap or a bearish and balance
same thing to get broken above and then
off of this candle I will take a now
this is the hourly time frame I do not
use this on the hourly time frame I
typically like the one to the 5 minute
time frame the best for an inverse rev
Gap so without further Ado let's look at
a few examples on the lower time frame
in example number one we can clearly see
we get a bunch of chop here and what
happens here is we bounce or Wick off of
a bullish ril Gap here now this did not
get inversed so what does that tell me
that tells me that price is likely to be
bullish now what's something that
confirms our entry or tells me okay
price is bullish I'm going to enter now
well that's when I look for a bearish
gap in this example since we are
bouncing off of a bullish Gap and price
is bullish I look for a bearish gap to
get inversed so what do I do I look for
one a fair value Gap and we need a good
fair value Gap so I would say this is a
pretty go to one here and if I just go
in the replay mode you can see we don't
know if the fair value gap's going to
form here because we haven't created
that third candle yet now when we see
the third candle's Wick does not trade
above and overlap this Wick here okay I
know that this could be a good Fair valy
Gap to use if it breaks now if it
doesn't break I wouldn't take the entry
so if we play price you can see the next
candle does close above therefore I
would take my entry and for people who
wondering where the stop loss would go I
typically just do a stop loss if we
close back below now you can change this
up you can do it at the low but it does
definitely worsen the risk reward and if
you are correct we should not even close
below that for a rail Gap anyways so you
can maybe kind of guesstimate and do a
stop loss around here and in this
example I'd be targeting this high for
about a 1.3 R and then I'd be targeting
the next high for about a 3.29 r
so when this fa up here gets closed
above and I see okay we're bouncing from
this Gap here then I know this is likely
to be a good entry so if we just play
candles real quick it hits the take
profit beautifully and you can clearly
see that once this bearish Gap gets
closed above and we get good momentum
through it look how well price just
accelerates and this is why I love them
so much now most people they actually
are trying to short this and this is
just all the people getting liquidated
reversing their positions that was a
bullish example let's get into a bearish
example this is a bearish example so in
this example we first have to identify
the fair value Gap so in this case it
would be right here to right here
because you can see that first candle
that Wick does not overlap this candle's
Wick so you can see it creates a hidden
Gap and what happens at first is price
does hold the Gap now we do wick below
it but
Wicks do not matter for an inverse r
value Gap we want to see a body close
below it so we can see we go back up we
take out the high one more time and then
price really starts to rally and then
and more importantly closes below the
Gap that held once before so in this
case this would be a bearish entry and
some people are probably wondering could
you wait for a retrace yes you could
it's up to you but sometimes you might
not get it and what you do is you enter
there whether it be on the close or the
retrace and you target the next obvious
low so I would say this would be a good
Target maybe you could Target lower it
doesn't matter and that's where I'd
cover the position so this would be
about a 1.4 R so that is an example of a
bullish and a bearish inverse frale Gap
this is all I trade I do not use normal
fra gaps and if you can truly Master
this art of this entry along with a
narrative along with a bias then you can
definitely Master the markets if you
want to check out more such as my trades
such as any classes I do that may be
free click the link into my description
there's a free Discord link I have over
15,000 members and there's a lot of
other people trading the same exact
thing that I'm teaching you here in this
video and again feel free to ask
questions in the chat and check out some
of my other socials all by joining the
Discord in the link in the description
thank you guys for watching this video I
will see you in the next
one
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