I just realized something that many traders overlook when learning about Smart Money Concepts — that is, Fair Value Gap (FVG). Actually, what is a fair value gap, and why do major institutions use it so frequently?

It's simple. When price moves too quickly, it skips over certain price levels — these are the gaps that the market hasn't touched yet. Strangely enough, institutions often come back to fill these gaps. That’s when retail traders have the opportunity to enter trades at professional levels.

So what exactly is a fair value gap? It forms when you have 3 consecutive candles: the first candle down, the middle candle with strong upward impulsive movement (impulsive move), and the third candle down or a doji. The distance between the high of the first candle and the low of the third candle — that is the FVG. I often call it the "price magnet" because the price always returns to fill it.

The interesting part is that you shouldn't use FVG alone. When combined with market structure (BOS, CHoCH), the win rate increases significantly. If the FVG is near an Order Block (Order Block), the trades tend to be stronger because both are areas of interest for smart money.

How to identify a fair value gap on the chart? On the Binance app, open TradingView, select the 1H or 4H timeframe, find 3 candles with a gap between them, then use the rectangle tool to mark it. Set an alert when price approaches that area.

The entry process is quite simple:

First, identify the main trend. Then look for an FVG formed within impulsive movement. Wait for the price to return and retrace into the FVG area. When a confirmation candle appears on a lower timeframe (15 minutes or 5 minutes), enter the trade. Stop loss should be placed below the FVG or below the nearest swing low for safety. Take profit can be the previous high or liquidity zones.

I once traded BTC/USDT with an FVG from 62,000 to 62,600. Price returned to 62,300 to fill the gap, confirmed on the 15-minute chart, entered at 62,350 with SL at 62,100 and TP above 63,200. The result was a 3x profit with minimal risk.

Timeframes are also important. Use 4H and 1H to identify strong institutional zones, and 15-minute and 5-minute to confirm and enter. Only professional traders use 1-minute, and it must be supported by higher timeframes.

If you combine FVG with liquidity sweeps (when the price hits stop-loss then enters the FVG), that’s the best entry zone. I always record each FVG trade to learn and manage risk tightly — never risking more than 1-2% per trade.

In summary, what is a fair value gap and why is it important? It’s a turning point to trade like institutions, avoid retail traps, and understand smart money flow. But remember, never use FVG alone — always combine it with market structure, order blocks, liquidity sweeps, and higher timeframe analysis. That’s the professional way.