Fair Value Gaps

Understand Fair Value Gaps (FVG), a core Smart Money Concept. Learn how to identify and interpret FVGs in market analysis, explained in detail.

Published · Updated · Methodology: SMC

Part of: Fair Value Gap (FVG)

  • Methodology: SMC
  • Content type: educational

Indicators used

  • Fair Value Gap (FVG)

Source video

Decoded from: Fair Value Gaps Explained in 22 Minutes by JadeCap — watch the original

Strategy overview

A fair value gap (FVG) is the price imbalance left behind when a candle moves so quickly that it skips a zone where buyers and sellers never fully transacted, leaving an inefficiency the market often revisits later. This entry decodes JadeCap's "Fair Value Gaps Explained in 22 Minutes", a video that treats the FVG not as one tool inside a larger system but as the subject in its own right — a focused, ground-up explainer devoted entirely to what the gap is and why it matters.

That single-concept framing is what sets this source apart. Rather than folding the FVG into a multi-signal toolkit, a premium/discount matrix, or an indicator install, the video slows down on the mechanic itself: how the imbalance forms across the sequence of candles, why fast, one-sided moves leave a gap the market tends to treat as unfinished business, and why price is so often drawn back toward that zone before continuing. It is closer to a masterclass on a single building block than a trade plan built around it.

Because this is an explainer rather than a mechanical rule set, the value here is conceptual: a clear mental model of the FVG that you can carry into any Smart Money Concepts (SMC) framework. This page maps how JadeCap defines and reasons about the gap in the source video; the specifics of how any given trader turns that idea into entries, stops and filters are a separate step from understanding the concept itself.

Topics

fair value gaps · fvg · smc strategy · smart money concept · price action · trading concept · market analysis · tradingview strategy · pine script

Frequently asked questions

What is a fair value gap (FVG)?

A fair value gap is a price imbalance created when a strong, fast move leaves a zone that price passed through without full two-sided trading. In SMC terms it marks an inefficiency the market often revisits, which is why traders watch these gaps as potential reaction areas.

Why does a fair value gap form in the first place?

It forms when momentum is heavily one-sided and price displaces so quickly that a gap is left between candles where little transacting occurred. JadeCap's video focuses on this formation mechanic — walking through why aggressive, imbalanced moves create the gap rather than just how to trade it.

Does price always come back to fill a fair value gap?

No. Gaps are frequently revisited because the market tends to treat them as unfinished business, but a return is a tendency, not a guarantee — some gaps are filled quickly, some later, and some not at all. Treating a fill as certain is a common misreading of the concept.

How can I go from understanding the FVG concept to testing it?

Start by building a solid mental model of how the gap forms and behaves, as this video does, then define specific conditions and backtest them on historical data before risking capital. Strategy Decoder extracts the structure of strategies from video sources so you can study and evaluate the underlying idea on TradingView.

About this strategy page

This trading strategy was decoded by Strategy Decoder's AI from a public YouTube trading video and turned into a structured, reviewable specification. In the interactive app this page shows the full entry and exit logic, risk management settings, the indicators involved with their parameters, AlgoWizard-compatible logic and a Pine Script export ready for TradingView backtesting — plus an automated backtest verdict when one has been computed for this strategy.

Strategy Decoder catalogs 2,229 decoded strategies. Each one is extracted with confidence scoring, cross-linked to the indicators it uses, and kept up to date as new videos are processed daily. Load this page with JavaScript enabled to use the interactive tools, or start from the strategy explorer to filter by methodology, market and timeframe.

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