NinjaTrader Fair Value Gap (FVG) Indicator is designed to identify and analyze price gaps that occur due to an imbalance between supply and demand.
Such gaps form when there are not enough trades in certain price ranges, creating a gap between fair buy and sell levels. These areas, called “Fair Value Gaps” (FVG), are key zones that can serve as indicators for predicting further price movement.
FVGs form when the range of one candle is not completely covered by the previous or next candle, leaving a price gap. These zones can act as support or resistance levels, where the price often returns to fill the gap before continuing its movement.
The main concept of the indicator is to identify moments when the market makes strong impulse moves, leaving price gaps behind. Such gaps signal an imbalance between buyers and sellers, which can be used to predict trend continuation.
The indicator helps traders find high-probability entry points based on the assumption that price will typically revert to the FVG level before continuing in the direction of the dominant trend. This solves the problem of identifying strong momentum moves and allows traders to act in the direction of the main trend once the gap is filled.
Traditional technical analysis relies on established patterns and indicators, but FVG provides a unique advantage by focusing on market structure and momentum shifts. The benefit of using FVG in analysis lies in its ability to identify key price zones where traders can look for trading opportunities.
The indicator employs two main FVG detection models: the standard model, which identifies all emerging gaps, and the advanced model, which additionally considers confirmations through Break of Structure (BOS) and Change of Character (CHOCH). Using FVG in combination with market structure analysis (BOS/CHOCH) enhances signal accuracy and allows traders to effectively identify potential entry points.
The FVG trading strategy is to identify and exploit price gaps caused by unbalanced buying or selling pressure in the market. An FVG indicates a situation where supply significantly exceeds demand or vice versa, potentially leading to a rapid price move either higher (in the case of excess demand) or lower (in the case of excess supply).
There are two types of FVG: bullish and bearish. A bullish FVG forms when there is a gap between the high of the first candle and the low of the third candle, signaling a potential price increase. A bearish FVG forms when there is a gap between the low of the first candle and the high of the third candle, indicating a potential price decrease.
If an FVG forms within an uptrend, the FVG trading strategy suggests that the price will return to the FVG before continuing upward. If an FVG forms within a downtrend, the price is expected to return to the FVG before continuing downward.
To find an opportunity and decide whether to open a trade, traders must wait for the indicator to complete two key steps:
Step 1. Identifying a Fair Value Gap
Step 2. Waiting for a Price Retest
The indicator has two modes for detecting FVGs:
Additional Components in the Advanced Model
This mode integrates BOS and CHOCH confirmations with FVG detection, significantly improving trade entry accuracy. By combining FVG with market structure analysis, traders can focus on the strongest and most reliable signals. BOS or CHOCH breakouts occurring within the FVG typically indicate strong market momentum, increasing the likelihood of successful trades while reducing false signals.
The indicator has the following parameters:
Allowed Direction – Determines the direction of FVG detection and display. Options: BOTH – Identifies and displays both bullish and bearish FVGs; LONG – Displays only bullish FVGs (buy-side); SHORT – Displays only bearish FVGs (sell-side).
Type Filling/Shrink – Selects the visual style of FVG representation. Options: Filling – The FVG zone is fully filled; Shrink – The FVG shrinks as the price touches it.
Min/Max Range Price Type – Defines the unit of measurement for the FVG size range. Options: Ticks, Points, Price Percent.
Min Range / Max Range – Sets the minimum and maximum FVG size based on the selected Min/Max Range Price Type (Ticks, Points, or Percentage).
Touch Price Type – Specifies the price level used to determine when an FVG is touched. Options: Close or High/Low. This setting affects how the Minimum Percentage Signal Level is calculated.
Minimum Percentage Signal Level – Sets the minimum percentage of FVG fill required to generate a signal (i.e., price touch detection). The calculation is influenced by the selected Touch Price Type.
Enable Touch Repeats: Enabled – Displays all instances of price touching the FVG; Disabled – Shows only the first touch event.
Max Bars Expiration – Set the maximum FVG length values in bars.
Remove upon fill – If enabled, filled (outdated) FVGs will be removed from the chart.
Enable BOS & CHoCH Confirmation – Enables or disables Break of Structure (BOS) and Change of Character (CHoCH) confirmations for FVG detection (Advanced Mode).
Display Non-Confirmed FVG Formations – If enabled, displays all FVG formations, including those that do not meet BOS & CHoCH confirmation criteria (only applicable if BOS & CHoCH Confirmation is enabled).
BOS & CHoCH Swing Strength – Defines the minimum swing size required for an FVG to be confirmed with BOS or CHoCH. A higher value (3 or 4) requires a stronger price move to confirm BOS or CHoCH. A lower value (1 or 2) makes the indicator more sensitive, detecting smaller market structure shifts.
We can also turn the indicator into an Automated Trading Strategy with an extended set of custom functions (stop loss, take profit, trailing stop, risk management parameters, trading time limit, and others).
Request a free consultation from our team of professional programmers and find out the cost and timing of your project development.
Nordman Algorithms is not liable for any risk that you face using the software. Please, use the software on your own responsibility. The software is coded in accordance with a common known concept and Nordman Algorithms does not guarantee accuracy or trading performance of the software signals.
Futures, foreign currency and options trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing one’s financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results. View Full Risk Disclosure.
CFTC Rules 4.41 – Hypothetical or Simulated performance results that have certain inherent limitations. Unlike the results shown in an actual performance record, these results do not represent actual trading. Also, because these trades have not actually been executed, these results may have under-or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated or hypothetical trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to these being shown.
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