How to trade Fair Value Gaps Pt.2 #shorts

29 Jun 2023 · 0 min

Watch on YouTube

0:28

In this YouTube short, the speaker explains that the majority of traders are unaware of fair value gaps, but algorithmic market participants actively target them. These gaps represent liquidity imbalances that disrupt market equilibrium, and because algorithms strive for equilibrium, they work to fill these gaps. The speaker emphasizes the rule that imbalances always get filled, citing CME futures gaps as a concrete example that consistently close over time.

because most people, 99% of people, don't know about fair value gaps. But you guys do. And more importantly, the algorithms that reprice the markets really love fair value gaps because the thing about these algorithms is that they always want the markets to be in a state of equilibrium. And in order to do that, well, these gaps does not signify equilibrium. This is a gap of liquidity that needs to be filled. Always remember this. This is another pro tip, which is imbalances always get filled. That's why if you look at the CME futures gap, they always get filled one time or another.