Recently, while organizing my trading notes, I realized I still have many blind spots in my understanding of FVG (Fair Value Gap). So I took the time to review and categorize various FVG situations I've encountered over the years and want to share them with everyone.

First, let's understand what an FVG is. Simply put, it's a gap in price caused by a sharp move within a short period, leaving a noticeable blank space on the chart. This phenomenon seems simple, but the market sentiment behind it is worth analyzing. I find the most practical way to judge it is by looking at volume and the trend context—an identical FVG can have completely different implications depending on the market environment.

The two most basic types are bullish and bearish FVGs. A bullish FVG usually appears when the opening price is significantly higher than the previous day's close, indicating stronger buying pressure. From my experience, when an FVG forms along with increasing volume, the probability of the trend continuing is higher. Conversely, a bearish FVG occurs when the opening price gaps down, accompanied by selling pressure. In these cases, the FVG area often becomes a new support or resistance level, and prices tend to find a bottom or encounter resistance there during pullbacks.

In strong trending markets, FVGs that appear in the middle of the trend are what I call "out-of-control" FVGs. These typically occur mid-trend, with volume not necessarily at its peak but with very strong market momentum. Such FVGs are less likely to be quickly filled and tend to continue along the trend direction. I often use the size of these FVGs to gauge how much further the trend can go, which is very helpful for setting target levels.

Another particularly noteworthy type is the exhaustion FVG. This usually appears at the end of a long-term trend, characterized most clearly by declining volume. I’ve observed that when an FVG appears alongside decreasing volume, it often signals that the trend is losing momentum and a reversal is more likely. If, at the same time, the price action shows abnormal behavior, it’s basically a signal to exit or to consider a reverse position.

FVGs that occur during consolidation are more common and I call them "ordinary FVGs." These tend to be small, with low volume, and are often filled within a few trading days. Honestly, these FVGs have little trading value, and I usually ignore them altogether.

The midpoint FVG is another interesting phenomenon. When an FVG appears near the 50% point of the trend’s move, it often indicates that the trend will continue. I use the size of this type of FVG to predict how far the subsequent move might go, and the results are quite good.

Island reversal FVGs are rare but very strong signals. They consist of two FVGs separated by a brief consolidation, forming an isolated "island." Once this pattern appears, it often indicates a trend reversal. I’ve seen this happen several times, and the success rate of entering after confirmation is particularly high.

It’s also important to distinguish between professional FVGs and novice FVGs. Professional FVGs usually involve large volume and are not quickly filled, indicating institutional participation. Novice FVGs, on the other hand, tend to have smaller volume and can reverse rapidly, which can be misleading. My advice is to be cautious when encountering novice-type FVGs and wait for further confirmation before acting.

All in all, the core point is this: FVG itself is not a trading signal. Volume, trend context, and confirmation are what matter. The same FVG can have very different implications depending on the environment. To effectively use FVGs in trading, you must consider them within the overall market structure rather than in isolation. Only then can you truly improve your trading success rate.