What is fair value gap?

What it means

The gap represents an imbalance: price moved through that range so fast that little two-sided trading occurred. The theory holds that markets tend to return and trade through such ranges properly, making the gap a magnet and a potential entry zone.

Why it matters

Identification is mechanical, which is the concept's main practical virtue — the high of the first candle and the low of the third simply fail to overlap. There is no discretion involved, so it can be coded and evaluated objectively.

What this changes in practice

Our SMC-FVG implementation did not survive evaluation and is disabled. That is not evidence the concept is worthless; it is evidence that our implementation of it on XAUUSD, at the timeframes we scan, did not produce an edge that persisted out of sample. Publishing that distinction matters more than defending the strategy, and the strategy list is built around it.