Encyclopedia Classification
Category: Advanced Trading • Market Inefficiencies • Institutional Analysis
Discipline: Smart Money Concepts • Price Action • Order Flow • Market Structure
Prerequisites
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Article 151 — Market Structure: Understanding How Crypto Markets Actually Move
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Article 153 — Liquidity Analysis: How Markets Hunt Stops, Create Traps, and Move Capital
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Article 154 — Order Blocks: How Institutions Build Positions and Where Smart Money Enters
Related Articles
Volume Profile • Imbalance Trading • Market Makers • Institutional Execution • Price Action
Definition
A Fair Value Gap (FVG) is a price imbalance created when aggressive buying or selling causes price to move so quickly that there is little trading activity between certain price levels.
Traders believe these areas may later be revisited as the market attempts to "rebalance" the inefficiency.
Beginner Explanation
Imagine a market where Bitcoin trades:
\$60,000
Then suddenly:
\$62,000
Then:
\$65,000
Price moved so quickly that many traders never had the opportunity to transact between those prices.
That creates a gap in market participation.
The market may later return to that area to:
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Fill missing orders
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Find liquidity
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Create balance
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