Jesse Rogers breaks down why traders lose money with fair value gaps: they trade every gap instead of waiting for confirmation like an engulfing candle, and they place stops inside the gap instead of beyond it. Three mistakes that cost you.
Your fair value gaps fail you because you choose the wrong ones. First mistake you trade every fair value gap that you see. Not all gaps are created equal. You need the gap to form at a significant level, not in the middle of a range. Second mistake you don't wait for any confirmation because after price tests a gap, you need to see an engulfing candle form, and that is your confirmation that the gap is holding. Third mistake you use the wrong stop placement. Your stop should go beyond the gap and not inside it, because the market can always decide to trade deeper without invalidating the gap, which means your stop loss is in the wrong place. Fix these three mistakes and fair value gaps will become one of the most reliable tools that you'll ever trade. Now send this to a friend who's also struggling with them.
