Simple FVG - All Gaps

User Guide: Trading with the Simple Fair Value Gap (FVG) Indicator

This document explains how to use the "Simple FVG" indicator to identify market inefficiencies and potential trading opportunities. This tool focuses exclusively on the concept of Fair Value Gaps (FVG) to provide clear, objective levels for entry and price targets.

The core function of this indicator is to visually highlight areas of market inefficiency—Fair Value Gaps—which often act as magnets for future price action, providing clear zones for potential trade entries.

Part 1: Understanding Fair Value Gaps (FVG)

A Fair Value Gap (FVG) is a three-candle pattern where the high of the first candle and the low of the third candle (or vice-versa) do not overlap. This gap represents an area where price moved quickly, indicating a potential imbalance between buyers and sellers.

1. Bullish FVG: These gaps are colored

   Green

   (default). They occur when the current low is higher than the high of the candle two bars prior.
   Interpretation: Bullish FVGs act as potential support. Traders look for price to return to this zone to enter a long (buy) trade.
   
2. Bearish FVG: These gaps are colored

   Red

   (default). They occur when the current high is lower than the low of the candle two bars prior.
   Interpretation: Bearish FVGs act as potential resistance. Traders look for price to return to this zone to enter a short (sell) trade.
   
3. Max FVG History: The indicator can display up to 500 of the most recent FVGs on your chart, ensuring you are focused on relevant, recent market structure.
   

Part 2: Mitigation and Gap Management

FVGs are considered "mitigated" when price re-enters the gap, effectively filling the market inefficiency. The indicator allows you to customize how this mitigation is defined.

1. Mitigation Type: This setting determines the condition under which an FVG is considered filled and changes color (or is hidden). You can select one of three options:
   Touch: The FVG is mitigated when price simply touches the boundary of the gap.
   Mid: The FVG is mitigated when price fills 50% of the gap (the default setting).
   Full: The FVG is mitigated when price completely fills the entire gap.
   
2. Mitigated FVG Display: You can choose whether to display mitigated FVGs.
   
   • Show Mitigated FVG: If enabled, mitigated gaps will change color to

     Gray

     (default).
     
   • Hide Mitigated FVG: If disabled, the gap will disappear from the chart once the mitigation condition is met.
     

Part 3: Visual Extension Settings

The indicator allows you to control how long the FVG box is drawn on the chart.

1. Extension Type:Indefinite: The FVG box will extend to the right until it is mitigated.
   Fixed Bars: The FVG box will only extend for a set number of bars, defined by the Extension Bars setting. Note: Even if the visual box disappears, the FVG is still considered active until it is mitigated.
   
2. Extension Bars: Sets the number of bars (default is 5) for the visual extension when Fixed Bars is selected.
   

Trading Strategy Flow with FVG

1. Identify: Look for a fresh, unmitigated

   Bullish

   (Green) or

   Bearish

   (Red) FVG.
   
2. Wait for Return: Wait for the price to return to the FVG zone.
   
3. Execute Trade:For a Long Trade: Enter when price touches the FVG (ideally at the Mid level) and shows a rejection or reversal pattern.
   For a Short Trade: Enter when price touches the FVG (ideally at the Mid level) and shows a rejection or reversal pattern.
   
4. Set Stop-Loss: Place your Stop-Loss just outside the FVG zone, or beyond the distal end of the gap.
   
5. Set Take-Profit: Target the next major market structure point or the next unmitigated FVG in the direction of your trade.
   

Disclaimer: Trading involves risk. This indicator is a tool for analysis and does not guarantee profits. Always use proper risk management.