Why it matters
Why fair value gap matters to traders
Traders use the unoverlapped area as evidence that price moved with unusual urgency and did not spend much time trading two ways there. It can therefore become a reference area if price later retraces.
Practical use
How traders use it
Identify the pattern with a fixed rule, then ask whether it aligns with structure, displacement, trend and a meaningful area. The gap should support a setup, not become a reason to trade by itself.
Common mistake
What to avoid
The words “fair value” are easy to take too literally. An FVG is not an objective valuation model and there is no market law requiring every gap to be filled.
Use the concept, not the label
Trading terminology is useful only when it improves a repeatable process. Define the concept clearly, test how you use it, pair it with risk management, and avoid turning chart language into certainty about what the market must do next.