Jesse Rogers breaks down why fair value gaps fail traders and offers three fixes: only trade gaps that break through swing points, skip gaps formed during sideways movement, and recognize when a gap signals reversal instead of continuation.
Your fair value gaps fail you because you choose the wrong ones. You want to buy every bullish fair value gap and sell from every bearish fair value gap. But enough said, here's how to actually choose the right fair value gaps. First, only trade gaps that break through swing points. Because when a gap moves through structure with force, 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, they're just noise and they're likely to get filled quickly. And finally, if you see a gap that takes out a swing point and gets traded through immediately, that's not failure, that's an inversion fair value gap, and it's telling you the market is reversing. Now save this post. So the next time you're trading fair value gaps, you can come and study this to make sure that they're the right ones.
