How to trade Fair Value Gaps Pt.2 #shorts

29 Jun 2023 · 0 min

Watch on YouTube

0:28

In this YouTube short, the creator from The Art Of Crypto explains that the vast majority of traders are unaware of fair value gaps, while seasoned traders recognize their importance. He describes how algorithmic market makers constantly seek equilibrium, and any gap in price represents a liquidity imbalance that must be filled. The speaker emphasizes a core pro‑tip: market imbalances, such as fair value gaps, inevitably get filled. He cites CME futures gaps as a concrete example, noting that these gaps are almost always closed at some point, reinforcing the idea that gaps are predictable trading opportunities.

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.