What is an iFVG?

Summary

This 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

00:00

📊 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.

05:02

📉 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.

Keywords

💡Funded Account

A funded account in the context of trading refers to an account that has been provided with capital, which can be used to execute trades. In the video, the speaker mentions making over $3,000 on a funded account, indicating the initial capital that was used to generate profits through trading activities.

💡Inversion Fair Val Gap

The term 'Inversion Fair Val Gap' seems to be a specific trading strategy or concept discussed in the video. It likely involves identifying gaps in the market that are not typically recognized and trading based on these gaps. The speaker claims to have made significant profits using this strategy and aims to teach the audience how to replicate it.

💡Gap

In trading, a 'gap' refers to a price area with no trading activity between two periods. It is a discontinuity in the price chart where the last price of one period does not overlap with the first price of the next period. The video script explains that a 'Fair Value Gap' is a type of gap where the wicks of the first and third candles do not overlap, creating a hidden gap.

💡Bullish Gap

A 'Bullish Gap' is a gap that occurs when the price of a security moves higher between two trading periods, indicating buying pressure. In the video, the speaker uses the concept of a bullish gap to illustrate a scenario where the market is expected to continue rising, and the gap is used as a signal for potential entry points.

💡Bearish Gap

Conversely, a 'Bearish Gap' indicates a downward price movement between two trading periods, suggesting selling pressure. The video script describes how a bearish gap is identified and used as a signal for potential short positions or selling opportunities in the market.

💡Efficiency

In the context of the video, 'Efficiency' or 'Inefficiency' is used interchangeably with 'Gap' or 'Fair Value Gap'. It refers to the lack of price overlap between candlesticks, which can be seen as an area of the market that has not been 'filled' or traded through, indicating potential inefficiencies in the market's pricing.

💡Rejection

Rejection in trading terms refers to the price action that occurs when a security's price approaches a certain level and then moves away from it, indicating that the market is not ready to accept the new price level. The video discusses looking for a rejection off a 'Bearish Fair Val Gap' as a potential trading signal.

💡Bounce

A 'Bounce' is a price movement in the opposite direction after hitting a certain level, often seen as a potential buying opportunity. The video mentions looking for a bounce off a 'Bullish Fair Val Gap' as a signal for a potential long position in the market.

💡Violation

In the context of the video, a 'Violation' of a gap refers to the price action that closes beyond the gap, effectively 'filling' the gap. The speaker mentions waiting for a bearish gap to be violated, which is a signal for them to enter a trade in the opposite direction of the gap.

💡Stop Loss

A 'Stop Loss' is an order placed with a broker to sell a security when it reaches a certain price. It is designed to limit an investor's loss on a position. The video script explains that the speaker typically places a stop loss if the price closes back below the gap, which helps manage risk in their trading strategy.

💡Risk Reward

The 'Risk Reward' ratio is a fundamental concept in trading that compares the potential risk of a trade to the potential reward. In the video, the speaker discusses setting a stop loss that does not worsen the risk-reward ratio, indicating the importance of managing the balance between potential gains and potential losses.

💡Momentum

Momentum in trading refers to the rate of change of price. A security with strong momentum is moving rapidly in a particular direction. The video script mentions that once a bearish gap gets closed above and there is good momentum, the price accelerates, which is a key factor in the speaker's trading strategy.

💡Discord

Discord is a communication platform that the speaker uses to connect with a community of over 15,000 members who are trading the same strategy discussed in the video. It serves as a social hub where traders can share ideas, discuss trades, and learn from each other.

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