Fair Value Gaps

Understand Fair Value Gaps (FVG) within Smart Money Concepts (SMC). Learn how to identify FVGs on charts and their significance in price action analysis.

Published · Updated · Methodology: SMC

Part of: Fair Value Gap (FVG)

  • Methodology: SMC
  • Content type: educational

Source video

Decoded from: How to Trade Fair Value Gaps (Best Tutorial) by LuxAlgo — watch the original

Key timestamps:

  • 0:00 - Introduction to Fair Value Gaps

Strategy overview

A fair value gap is a price imbalance: the untraded space a fast three-candle move leaves behind when price advances too quickly for both sides to transact at every level, and which the market often revisits to "fill." This entry decodes LuxAlgo's tutorial "How to Trade Fair Value Gaps (Best Tutorial)", which treats that single mechanic as its entire subject rather than one ingredient in a larger setup.

What sets this source apart is its origin and its scope. LuxAlgo is a trading-tools publisher, and its Smart Money Concepts framing reads the fair value gap as a footprint of imbalanced order flow — a place where large-scale activity ran price in one direction and left an inefficiency behind. Because the video is built as a from-the-ground-up tutorial focused only on the gap, it approaches the concept as something to be learned on its own terms first, before it gets wired into any multi-indicator stack, named model, or timing routine.

Taking the gap concept-first raises a familiar set of questions a tutorial format is built to address: how to identify a valid gap, how to separate an imbalance worth watching from ordinary noise, and how price tends to behave when it returns to the zone. This page pairs the concept with its LuxAlgo source so you can follow the original walkthrough — the specific way this video defines and applies the gap lives in that tutorial, alongside the broader Fair Value Gap concept hub.

Topics

fair value gaps · fvg · smc strategy · ict trading · price action · trading strategy · pine script · tradingview strategy · order block trading · smart money concepts

Frequently asked questions

What is a fair value gap (FVG)?

A fair value gap is a price imbalance created by a fast three-candle move that leaves an untraded gap between candles. Because price passed through that zone without transacting at every level, the market frequently returns to it later, which is why traders track gaps as potential reaction areas.

How do traders use a fair value gap?

The general approach is to mark the imbalance left by a fast move, then watch how price behaves when it comes back to that zone — using the return to the gap as a possible entry or reaction area rather than the initial move itself. The exact conditions vary by trader and source.

What is distinctive about LuxAlgo's fair value gap tutorial?

It is a standalone, single-concept tutorial from a trading-tools publisher, teaching the fair value gap on its own terms through a Smart Money Concepts lens — as a footprint of imbalanced order flow — rather than embedding it inside a larger multi-indicator system or named model. The "Best Tutorial" label is the creator's own framing.

How can I test a fair value gap approach before trading it?

Backtest it on historical data and study how price actually reacts to gaps on your chosen market and timeframe before risking capital. Strategy Decoder catalogs strategies like this one from video sources so you can review the concept and test it 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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