How to Use The Fair Value Gap Indicator (MT4 and MT5)

What is the Fair Value Gap Indicator (MT4 and MT5)?

The Fair Value Gap Indicator (MT4 and MT5) is designed to identify fair value gaps on the price chart. It helps traders to find the imbalance price sections faster and more clearly.

The indicator can be used by simply installing it into your trading chart and activating it. It works great for traders who trade based on price action since it will only show the imbalances on the price chart.

Why Do You Need to Use the Fair Value Gap Indicator (MT4 and MT5)?

If you are a beginner and not sure whether you should use the FVG or not, you can make a checklist here of whether these are something you are looking for.

• The Fair Value Gap Indicator helps traders refine ICT-based trading strategies.

• It helps you find entry and exit points.

• It detects liquidity gaps in the market for smart money concept traders.

• It helps you find support and resistance zones to see demand and supply.

How to Install the Fair Value Gap Indicator (MT4 and MT5)?

To use this indicator, you need to install it on your trading platforms first. If you are not sure how to, I will guide you through this step-by-step below:

Step-By-Step: Install Fair Value Gap Indicator in MT4

• First, download the FVG indicator from the website here: https://www.mql5.com/en/market/product/

• Then open your MT4 platform and open the data folder

• Drag the file to your MT4 and restart

• Apply an indicator to your chart by clicking on insert > indicator and selecting your indicator, then click ok

Step-By-Step: Install Fair Value Gap Indicator in MT5

• You can visit https://www.mql5.com/en/market/product/ to find an FVG indicator that you prefer to install.

• Once you have downloaded it, open the file.

• Drag an indicator file, as it might come as “.ex5” or “.mq5”, to apply on your chart.

• Restart your trading platform if you don’t see your indicator.

Fair Value Gap Indicator (MT4 and MT5) Features

Usually, when you install the fair value gap indicator, you need to see these similar features, and we would like to explain to you what it’s for:

• The Fair Value Gap Width Filter is a feature that shows you the gap; the wider it is, the stronger the price will come to retest either bounces or reversals.

• You can set up the color option; usually, the bearish gap will show the red zone, and the bullish gap will show you the green zone.

• You can choose to use a percentage display of mitigation to see what percentage of the gap has been filled on the price chart.

• With this Fair Value Gap Indicator, you can also keep track of your past price actions so that you can backtest and understand market behavior better.

How to Use the Fair Value Gap Indicator?

Once you have installed your indicator in either Fair Value Gap Indicator MT4  or Fair Value Gap Indicator MT5, you need to understand how to use it effectively. 

Bullish Fair Value Gap Indicator

The Fair Value Gap Indicator can help you find the bullish zone more easily. All you have to do is apply these entry criteria, stop loss, and take profit together with your indicator

Identify the entry

• Make sure that the market trend is in an uptrend

• Look for the price retracing into the FVG zone; usually, it happens between the first candlestick and the third candlestick

• You can enter at the bottom of the FVG zone

• Use the lower timeframe for a confirmation

Stop Loss

• Place the stop-loss below the FVG.

Take Profit

• Take profit at the recent swing high as your first profit spot.

• Take profit above the major swing high as your second profit spot.

Bearish Fair Value Gap Indicator

When the market is in a downtrend, here’s how you can use a bearish fair value gap indicator to make profits during the downtrend. See the details below:

Identify the entry

• Make sure that the market trend is in a downtrend.

• Look for the price retracing into the FVG zone, usually in the red box zone.

• You can enter at the top of the FVG zone.

• Use the lower timeframe for a confirmation.

Stop Loss

• Place the stop-loss above the FVG.

Take Profit

• Take profit at the recent swing low as your first profit spot.

• Take profit above the major swing low as your second profit spot.

Tips to Use This Fair Value Gap Indicator With Trading Strategy

Traders need to understand how to apply the indicator together with their trading strategy. As the Fair Value Gap shows a gap from price actions, it usually works best for price action or the SMAC trading strategy.

• Always check the market trends first before using the FVG indicator.

• You need to look for support and resistance levels to combine with FVG zones.

• Double-check for the confirmation at the lower timeframes before deciding to enter.

• Set stop-loss and take profits using a 1:2 risk-to-reward ratio to manage your own risk.

Conclusion

The Fair Value Gap Indicator (MT4 and MT5) is a great tool that can help you spot fair value gaps faster. It’s an essential tool for price action or smart money concept traders to find entry & exit easier. Also, combining the value gap indicator with other indicators will help you see clearer entry and exit spots. You can use this indicator for better results before entering the real trades.