Jesse Rogers breaks down three mistakes traders make with fair value gaps: trading without waiting for an engulfing candle confirmation, trading every gap instead of only significant ones, and placing stops inside the gap rather than beyond it.
The three mistakes you make when choosing fair value gaps and how to fix them. Number one, you don't wait for confirmation. After Price tests the gap, you need to see an engulfing candle form at the gap. That is your confirmation that the gap will hold. Number two, you trade every fair value gap that you see. Look, not all gaps are created equal. You need the gap to form at a significant level and not just in the middle of a range. Third mistake is that you use the wrong stop placement. You see, your stop should go beyond the gap, not inside it, because the market can always decide to trade deeper without even invalidating the gap. Which means that your stop loss is in the wrong place. If you fix these three mistakes, fair value gaps will become one of the most reliable tools that you'll ever trade. Now save this video so you can study it and take notes.
