Jesse Rogers breaks down why fair value gap trades fail: traders ignore context and treat every gap as tradable. Three rules that work: trade only gaps that break swing points, skip gaps in sideways markets, and recognize when a gap gets immediately traded through as a reversal signal, not a continuation setup.
Your fair value gaps fail you because you choose the wrong ones. The problem is that you treat every gap as a tradable level. This means that you're taking every gap you see without any context about where it formed or what it accomplished and this simply doesn't work. But here's how to choose the right fair value gaps. First only trade gaps that break through swing points because when a gap displaces through structure well this shows real momentum behind the move. Next, avoid gaps that form when the market is moving sideways. These don't have any real direction and they're just noise and they likely are going to get filled quickly. And finally if you see a gap that takes out liquidity and then gets traded through immediately, that's not failure that is an inversion fair value gap telling you that the market is reversing. Now save this post so the next time that you're trading fair value gaps you can come back and study to make sure that they're the right ones.
