FVG Strategy - Fair Value Gap
The Fair Value Gap Strategy (FVG) is a trading approach that relies on price action analysis and involves identifying market inefficiencies or imbalances.
The strategy offers a variety of customizable settings to match your preferences and includes an entry and exit strategy to guide you through trades.
The script operates in the following manner:
It begins by searching for fair-value-gaps and subsequently identifies a break in structure.
The next step involves waiting for the price to retrace within the previously established fair value gap.
Within this gap, there is a Fibonacci retracement that must be reached before placing a stop-order.
Example: GER40, 1min Chart
STOP LOSS & RISK MANAGEMENT
FVG: The stop loss will be set at the end of the fair value gap
Last Swing: The stop loss will be at the last swing high/low
ATR (Average True Range): The stop loss will be placed one 'Average True Range' away from the entry
TAKE PROFIT
Pips/Points: The stop loss will be set at the chosen amount of pips/points.
RiskReward TP: This is a fixed take profit where you can set a specific risk-to-reward ratio for the trade. For example, you can set a 1:3 risk-to-reward ratio.
Trailing Stop: This is a flexible stop that moves with the market price, allowing you to capture more profit as the trade moves in your favor.
Both: This option combines both the RiskReward TP and Trailing Stop. If the price target is set at a 1:3 risk-to-reward ratio, the trailing stop will move with the price until either the stop or take profit is reached, and the position will be closed completely.
THE FVG SECTION
In the FVG section, you will have the ability to customize your settings based on your specific requirements.
Firstly, you will have the choice of two possible entry options:
Candle Close: This option triggers the order once the candle has completely closed and all the set requirements are met.
Stop Orders: This option triggers the order once all the set requirements are met, even if the candle is still active and has not yet closed.
On top, you can activate the "Pinbar-Trading", that will allow you to take a trade on a pinbar, even when the candle just dipped into the FVG and snapped back.
FAIR VALUE GAP TYPE
On volatile market, it may happen that a massive FVG is created. Thats why we have separated the FVG into 2 different variables.
FVG Type: Normal: This is all regular FVG that meet the requirement of you minimum size range. As example FVG must be minimum 5$ big.
FVG Type: Big: This are all big FVG that meet the minimum set size range. The difference to the "normal" type, the stop loss will be set at 50% of the Big-FVG.
FIBONACCI RETRACEMENT & MARKET STRUCTURE
To refine the FVG strategy, you have three options:
Fibonacci Retracement Value (%): The FVG strategy employs a Fibonacci retracement, which allows you to trade in the direction of the market movement. To initiate the order, the price must reach a predetermined Fibonacci level and then rebound.
Formation-to-Retracement Countdown:: This option provides you with a specified number of candles to meet the necessary conditions. For example, if the order is not triggered within 20 candles, delete the FVG-Zone and skip the trade to avoid getting caught in a sideways ranging trend.
Structure Lookback: This feature filters out older FVG Zones. You can specify the number of candles that should mark the FVG Zones. Keep in mind that newer and fresher zones will automatically conceal older ones.
The strategy offers a variety of customizable settings to match your preferences and includes an entry and exit strategy to guide you through trades.
The script operates in the following manner:
It begins by searching for fair-value-gaps and subsequently identifies a break in structure.
The next step involves waiting for the price to retrace within the previously established fair value gap.
Within this gap, there is a Fibonacci retracement that must be reached before placing a stop-order.
Example: GER40, 1min Chart
STOP LOSS & RISK MANAGEMENT
FVG: The stop loss will be set at the end of the fair value gap
Last Swing: The stop loss will be at the last swing high/low
ATR (Average True Range): The stop loss will be placed one 'Average True Range' away from the entry
TAKE PROFIT
Pips/Points: The stop loss will be set at the chosen amount of pips/points.
RiskReward TP: This is a fixed take profit where you can set a specific risk-to-reward ratio for the trade. For example, you can set a 1:3 risk-to-reward ratio.
Trailing Stop: This is a flexible stop that moves with the market price, allowing you to capture more profit as the trade moves in your favor.
Both: This option combines both the RiskReward TP and Trailing Stop. If the price target is set at a 1:3 risk-to-reward ratio, the trailing stop will move with the price until either the stop or take profit is reached, and the position will be closed completely.
THE FVG SECTION
In the FVG section, you will have the ability to customize your settings based on your specific requirements.
Firstly, you will have the choice of two possible entry options:
Candle Close: This option triggers the order once the candle has completely closed and all the set requirements are met.
Stop Orders: This option triggers the order once all the set requirements are met, even if the candle is still active and has not yet closed.
On top, you can activate the "Pinbar-Trading", that will allow you to take a trade on a pinbar, even when the candle just dipped into the FVG and snapped back.
FAIR VALUE GAP TYPE
On volatile market, it may happen that a massive FVG is created. Thats why we have separated the FVG into 2 different variables.
FVG Type: Normal: This is all regular FVG that meet the requirement of you minimum size range. As example FVG must be minimum 5$ big.
FVG Type: Big: This are all big FVG that meet the minimum set size range. The difference to the "normal" type, the stop loss will be set at 50% of the Big-FVG.
FIBONACCI RETRACEMENT & MARKET STRUCTURE
To refine the FVG strategy, you have three options:
Fibonacci Retracement Value (%): The FVG strategy employs a Fibonacci retracement, which allows you to trade in the direction of the market movement. To initiate the order, the price must reach a predetermined Fibonacci level and then rebound.
Formation-to-Retracement Countdown:: This option provides you with a specified number of candles to meet the necessary conditions. For example, if the order is not triggered within 20 candles, delete the FVG-Zone and skip the trade to avoid getting caught in a sideways ranging trend.
Structure Lookback: This feature filters out older FVG Zones. You can specify the number of candles that should mark the FVG Zones. Keep in mind that newer and fresher zones will automatically conceal older ones.