the answer to most problems in trading is fair value gaps now to understand why fair value gaps are superior we need to First go over three mistakes that people make when using fair value gaps where the first mistake is assuming that every fair value Gap will hold and how can we know when a fair value Gap actually wants to hold there's three components that we need to go over right there where if we want to know if a fair valap will hold we need to know about Contex we need to know about the institutional story
and we need to know about Seek and Destroy first things first is context context is understanding the time frames so the time frames I'm using is the monthly the weekly The Daily 4 Hour 1 hour 50 minute 5 minute and 1 minute the higher the time frame and the highest time frame I use is the monthly time frame that is going to have the stronger fair value gaps now why is understanding those time frames important because often times people like to jump into the 15 minute time frame and automatically trade off of every fair value
Gap that they see well this fair value Gap right here is on the 4H hour time frame then we will see there are a lot of 5 minute fair value gaps higher already so why are we not continuing off of those Sur gaps and why are those Sur gaps not actually holding and the definition of when a fair value Gap is actually holding is when a fair value Gap is getting traded back into and it creates a new fair value Gap off of that so for example this 5 minutes fair value Gap right there is
holding right there the bearish value Gap because it creates a new 5 minute Fair Val Gap lower off of debt that is then the definition of holding for me but why do all these bullish fair value gaps right there not hold well because context there is a 4-Hour fair value Gap just below all those 5 minutes for gaps so those bullish 5 minutes for gaps they are not in cont context of that 4-Hour for Val Gap going higher this is exactly the reason why the higher time is important not because you can't go into the
5 minute and simply trade that you can but you need to have an understanding of what the higher ter is doing because those fair value gaps have a stronger magnet so the pull towards that fair value Gap is stronger and they also have a stronger rocket so the moving away from that F value Gap is also stronger because Banks institutions they do not operate from a 5 minute time frame standpoint they operate from the higher time frame so the higher the time frame the f is on the stronger that fair value Gap so make sure
when you are using the time frames correctly that every single time frame every fair value gap on the time frame is in context of the time frame above it and why is then this 4our value Gap in context that is because this 4H hour fair value Gap right there there is no daily fair value Gap Gap directly below it right there there is no daily forap that it can sting into right here which we can see on the daily right there the gray box being the 4H hour F Gap there is no daily F Gap
and for the daily there is also no weekly F Gap and for the monthly we are already inside that monthly fair value Gap so then when we work our way down every single time frame right here is in context of the time frame above it which is the first step to understanding why a fair value Gap will hold or will not hold then the second step is an Institutional story because right here at this moment in time this bearish fair value Gap right there is also in context meaning there is no daily fair value Gap
above it right there there's no weekly fair value Gap right above it so why does that 4our Gap not hold the institutional story is the following the market does one of two things it is either offering fair value or seeking liquidity where offering fair value is again seen through the three swing movement so we have one swing lower swing higher right there which first swing is sell side we offer sell side in the market we offer sellers a fair chance to get involved then after we offer buyers now a fair chance to get involved because
this swing lower the first swing we only had sellers getting involved we only gave a fair chance to sellers so now we need to offer buyers a fair chance as well so right here we offer buyers a fair chance right there as well then we move lower again creating 1 2 3 where this area where we now have sellers and buyers overlapping right there so two swings overlapping that creates a fair value area so if we want to retrace then the only area where we have not offered fair value just yet is indeed below that
low right there and is this is the only sell side area where we don't have buy side overl lapping just yet so retracement can be expected towards that fair value area to then continue lower because that again creates this new fair value area to offer fair value to offer both buyers and sellers a fair chance to get involved now what does that look like in the chart well right here if we move lower we have one swing we have two swings right there this is the sell side the buy side right there and then we
offer the sell side again which is ultimately below this low the lowest low that we create right there which then forms the following because right now this gray box right here then becomes the fair value area so if we are offering fair value we only need to retrace back towards these lows right there to then continue lower off of that if we are not continuing lower after offering that fair value right there then what is the market doing well again the market does either one of two things when it is moving it's either offering for
value or seeking liquidity so right there we can say it's not offering fair value anymore is it so then what is it doing it is seeking liquidity seeking liquidity and what is liquidity again swing highs and swing lows so then this right there becomes the target so this bearish for right there does that have a high probability of actually holding according to the institutional story no it does not so then what actually happens we see a bullish fair value Gap being created right there after we take out this low which as we know it also
creates what a sharp turn bearish for Val Gap and then a bullish for Gap combined with the institutional story what then is the higher probability for Value Gap this fair value Gap sitting right there now this right here is all hindsight but this was exactly called out before it happened in the money-making team and of course we made money from it as well now the last component to understanding if a fair value Gap will most likely hold is understanding Seek and Destroy Seek and Destroy also known as ranging conditions consolidations so we are not trending
we're not moving towards one side we are staying in the same place and Seek and Destroy conditions can be found through fair value gaps as well general rule of thumb if a bullish fair value Gap does not hold and a bearish fair value Gap also does not hold that is Seek and Destroy conditions so right here we have this bullish Fair Val Gap sitting right there that one does not hold what is again that hold it does not create a new fair value Gap higher off of that previous fair value Gap after that we see
this fair value Gap right there and even a little bit lower this Fair Val Gap both bearish Fair Val gaps also do not hold they do not create new fair value gaps going lower on the same time frame that you are looking at so after that once that happens on both the bullish side and the bearish side that leads to Seek and Destroy conditions that is when if you are a trending tra Trader which most people are you would want to avoid every single fair value Gap that comes after so all the fair value gaps
that we see going higher right there they are all already low probability right there every fair value Gap that's being created on lower than the 4-Hour time frame is also already lower probability and lower probability as in it is most likely not going to follow through higher or lower just yet and return into those trending conditions so then how do we know if a fair value Gap is ready to hold again and it's not in seeking short conditions anymore that is when we create a fair value gap for example this fair value Gap right there
and we follow through on that with a new fair value Gap so the fair value Gap holding is then again a sign that we are returning back to trending conditions so if we for example would have come back towards this 4our Val Gap and we create a new 4 Hour up lower off of that that is then a great sign great indication that we are returning back to trending conditions so the fair value gaps have again a high probability of holding now the second mistake that people make when using Fair Val gaps is assuming that
you need to use old fair value gaps no you don't need to and I'm going to show you what I mean so what exactly are old fair value gaps old fair value gaps are fair value gaps that already have been traded back into so for example this fair value Gap right there gets traded into very early right there the same for this fair value Gap and the fair value Gap that we see after right there so as soon as a fair value Gap is traded into it becomes an old fair value Gap meaning you don't
use it anymore that old Fair Val is not relevant anymore the only thing that's relevant is now the thing that they leave behind in that fair value Gap the story they tell you so this old fair value Gap right there as soon as we create a new fair value Gap right there we can see that this old fair value Gap is getting disrespected meaning premium arrays bearish F value gaps are not holding and whenever we have a bullish F value Gap right then going through an old fa value Gap that is higher probability of actually
holding and as soon as this one is getting disrespected you can simply delete it it's not going to give you any more accuracy it's just a waste of chart space and if for the Target if we look at the weekly time frame for example then on the weekly right here we see this weekly fair value Gap right there that has already been traded into so when we target higher based on that 4our V Gap and we expect higher prices the target is not the weekly fap anymore it has already been traded back into that is
not the target the target becomes this swing high right there the liquidity point that is inside that F Gap inside that old f Val Gap where this this can still function normally because that fa Val Gap has not been traded back into and if we even get more detailed about this let's look at this old fair value Gap right there that old fair value Gap is already of course as we know it with the first mistake is not in context because we have a monthly fair value Gap going against it right there but even more
on the weekly right here we see this first candle coming into it tries to reject lower because that candle and when it's wicking right there it's a sign of respect that we might want to continue lower on the next candle when we then do not follow through lower with that next candle and it's again an up candle this fair value Gap can already be removed it's not valid anymore it's not strong enough to push price lower it's now an old fair value Gap where eventually once we come above this High which is actually the target
then if we zoom in and we go into the daily time frame then we see that same fair value Gap again is not the target the swing high is the target but what else this fair value Gap has not been traded back into so that can be used as Target instead and that's exactly why we are seeing a huge rejection off of that fap and not the old weekly F Gap we had and often times this is a concept that is actually used in SMC space where people Mark out old fair value gaps and then
use them as old support and resistance because it's now traded through it defeats the purpose of why we even use these Concepts in the first place is to get more accurate it's to get better accuracy if we Mark out every single old fair value Gap then this is nothing more than if I were to put a random line right there on my chart and I would say oh look at that resistance oh wow look at that exact support see how the bodies are supporting that line it's the exact same so we lose all accuracy right
there the accuracy comes from the most recent fair value gaps that are are being created in price action which are the ones on the right side of our chart the ones that have not been traded back into right there we see this one gives us the accuracy that we need in order for us to take an entry the third big mistake is that people assume fair value gaps are always pointing in the right direction now if we think about what fair value gaps are fair value gaps they show the intention of price where price actually
wants to move towards but that exact same concept can also be used against Traders because if it shows intention it can also be used as than manipulation fake intention so what does that look like well right here we have 4our bearish Fair Val gaps going lower right there some people would assume this 4our V Gap might hold right there we can already see it is not getting respected it's not holding and then leaves behind a new 4our F Gap higher right there where the first one was actually used as manipul ation now remember the seek
androy conditions that we went over seek androy was again when we have no fair value Gap holding on either side of the market when we have a manipulation move like this how do we know it is actually manipulation do you see one 4our fair value Gap lower right there that actually held and that was holding meaning it actually created a new 4-Hour for V lower right there no so we can say there was never established bear order flow right there so even though it might follow through we still have to keep in our mind hey
there was never a fair value Gap that actually held so when we then create a bullish for Gap like that that's the sign that we do still want to continue higher overall now inside this 4our F fire gap right there we are running into the same problems constantly the same mistakes that a lot of people make when using fair value gaps because you can see how these mistakes are also linked to each other they go hand in hand where this five minute Gap all right that 5 minute is actually holding pushes price lower continuing lower
into a new 5 minute Gap but is this 5 minutes fa Val Gap in context right now no why not it's running into 4-Hour bullish Fair Val gap which one is stronger the 4our F Val Gap so it's much more likely that the 4our F Val Gap right there will actually push price higher instead of this 5 minutes value Gap pushing price lower already indicates this this F Gap is the one that will most likely hold so then eventually when we start to create new 5 minutes F gaps higher off of that 4-Hour F Gap
we can just simply say that these 5 minutes F gaps are high probability they're in context the institutional story is supporting the ID overall we don't have any seek androy conditions and that fair value Gap is actually pointing in the right direction because it's not a manipulation fair value Gap like we talked about so here on the one minute we see this gray box right there which is the 4our F Gap then we have the 5 minute F Gap higher right there that can even be confirmed now on the one minute time frame so at
this moment in time this in itself the creation of that fair value Gap is already an entry covering the lows targeting a nice one to two targeting higher right there that is absolutely perfect that's a great trade and maybe I'm a little biased because I also took this exact trade and I'll show you a Little Live clip which is currently playing right here of me taking that trade and again shared in the money making team as well so we now understand the three common mistakes that was the first thing we needed to understand in order
to answer the question why fair value gaps are superior and the reason fair value gaps are superior for me is because every single movement in price relies on Fair Value gaps so for example a market structure shift needs a fair value Gap Gap so then the market structure shift is not that relevant the fair value Gap is the most relevant so the same applies right here where you can enter even before you have a market structure shift for example in the sharp turn for example the 4H hour fair value Gap that we are trading off
of here on ES right there and also on Australian dollar US dollar right there this is even before a market structure shift and next to that order blocks mitigation blocks breaker blocks you will see every time you learn those or you study those people telling you oh but they're not valid without having a fair value Gap or they are higher probability if they have a fair value Gap and it's not me taking a shot at those other people but if you look into it then what is relevant the order block or the fair value Gap
well if we take away the fair value Gap the order block is not relevant if we leave the fair value Gap and the order block is not there the fair value Gap is still relevant so what is a superior PD Ray the fair value Gap so everything leads back to the fair value Gap where even right here once we come into this 4our that's your power three at that moment most likely we have some form of smt we have everything already incorporated into our trading plan when we use fair value gaps now you don't have
to believe me on this rather I would not even want you to believe me but if you want to see this for yourself and if if you want to prove me wrong then you can study the charts and you will get to the same conclusion as I have so hopefully together we can open some eyes in the trading community that it doesn't have to be this complicated again how complex something is and how simple something is is subjective so that's why I like to Define things but for me right here using fair value gaps as
my main strategy is Simplicity now if you find Fair vals interesting then I would highly ADV watching another video for example the previous video of the one candle tells you everything because in every concept almost every concept that I use fair value gaps are Incorporated they are at the core of my strategy and when you study that one Kindle video then even this video will make a lot more sense as well all right perfect thank you
